Insurance help: Who will insure for Appraised Value?

[Gary Chlastawa]

Hello Everyone,

Closing date is arriving quickly for my first investment property.  A 3 unit in Massachusetts. I've called many insurance companies and a couple agents.  Everyone I talk to wants to quote me for full replacement value of the dwelling, and they all come up with approximately the same value, 650k.  The purchase price is 226k.  All my quotes have been 3k+ a year because of this.  I would like to insure the dwelling for appraised purchase price of 226k.   

Did I make a mistake estimating insurance cost and I need to pay 3k a year?  When I ask about insuring for appraised value I get "No we don't do that" or "you really should go with replacement cost" and the call ends quickly.

It sounds like plenty of people insure their properties for less than full replacement cost, how do they do that?  What should I be saying?  Who should I be talking to?  In short what am I doing wrong?

Also, I live in Connecticut, the property is in Massachusetts, my primary residence insurance company will not insure in Mass. 

Thank you. 

[Terrell Garren]

As you build your portfolio and cash flow, you can accept more risk by self ensuring.  I select the highest possible deductible and Actual Cash Value of around 80% of the replacement costs.