SFR/Row Home Rental Property Insurance - Crazy Rebuild Costs?

[James Masotti]

Been shopping around for a new insurance provider for my rental properties. Currently I have 3 properties and USAA insures them all. 

Below are the details

Property 1 - Built 1985 - 2 Bed - 1.5 Bath - 1200 sqft. - Rebuild Cost $174,000 - Annual Premium $387 - Owned in personal name - Row home

Property 2 - Built 1921 - 4 Bed - 2.0 Bath - 1750 sqft - Rebuilt Cost $335,000 - Annual Premium $627 - Owned in LLC - All brick single family with detatched garage

Property 3 - Built 1910 - 3 bed - 1.0 Bath - 1300 sqft - Rebuild Cost $344,000 - Annual Premium $734 - Owned in LLC - Row home

Other than some obvious difference in size and age and ownership entity...The rebuilt costs that USAA are using seem all over as are the premiums. As far as I can tell I've got identical coverage on every property.

I talked to my contractor ,who has built houses from scratch, what it would cost to rebuild these in the event of a total loss situation and he said that $200,000 is the max on all of them except the all brick 1750 sqft one...which would be closer to $250,000. 

My first question is: Why would USAA have the rebuilds so much higher than this?

My second question is: Why do insurance rates seem to be all over the place?

I'm shopping around for new rates because I'm starting a new LLC with a new partner and USAA will no longer underwrite them. I've received a few recommendations from my local REIA and am getting quotes as varying as $625 to $1500 a year on the current properties. I guess it's not different than the crazy variety I saw when shopping banks for loan rates but holy smokes.

Anyone have any good recommendations other than the obvious just keep calling and shopping around on how to figure out what a reasonable quote is to be paying?

[Jason Bott]

@James Masotti and @William SaintAmour the rebuild cost the insurance carrier will be higher than the builders cost.  

The main difference is the insurance carriers costs will include the clean up and stabilization of the property.  Smoke or water remediation over a 2-4 week period can be expensive.

That being said, establish a rebuild cost with your contractor that you are comfortable with.  Ideally a cost per sq/ft.  Insurance companies range from $70 to $150 for rebuild cost.

Once you have that #, approach the new insurance carriers stating that is cost per sq/ft you want to insure to.