Can i choose the amount i want to insure for?

3 Replies

Im looking for help from someone that knows insurance well.  looking through the forms I see there is cash value, and replacement value insurance.  Do you know if there is a way to insure a property for a lesser value that I determine?  ie, if i want to insure a building that has a replacement value of 1,000,000 for 200,000 in a effort to save on premiums?

Originally posted by @John Luczy :

Im looking for help from someone that knows insurance well.  looking through the forms I see there is cash value, and replacement value insurance.  Do you know if there is a way to insure a property for a lesser value that I determine?  ie, if i want to insure a building that has a replacement value of 1,000,000 for 200,000 in a effort to save on premiums?

 John, there are some insurance companies who offer this, but it is not common.

In your scenario above, you could potentially save 20% to 30%, but will take on a lot of risk for a building with this value.

John,

As Jason said, there are some companies that will insure for less than Replacement Cost (RC).  The thing to watch for is what will happen on a partial loss.  Many policies have penalties if you do not maintain a specified percentage of the RC (typically 80%).

If you chose to insure at the Actual Cash Value (ACV) your limit will be less than the RC limit.  On a loss, the claim payout will be reduced for the depreciation.