$500,000 Insurance for $100,000 rental?
Closing on my first duplex next week. I called to set up insurance today. The property was built in 1900. Purchase price is $100,000. After answering the typical questions regarding materials and estimations, my insurance company recommended I insure the property at $500,000. They stated that older properties could require this kind of money to restore the decorative masonry used on the external part of the property, wood flooring, etc.
I’m used to insurance numbers coming in below purchase price because you do not have to rebuild the property, only the structure that is built on it. This is the first time I’ve questioned my very reliable insurance company, but it appears that I am being asked to over insure this property.
Thanks for your thoughts.