Insurance on a MFH - overpriced binder?

[Christen G.]

Hi all,

I'm closing on triplex here in the next couple of weeks (yay!) and went to my regular insurance guy to grab a quote/binder. My lender red flagged it for me when the binder came in as the coverage was for a little over $100k of the purchase price. The insurance guy said in his defense, "We are working with tools that estimate the cost to rebuild the home after a total loss. That is different than the transaction value that you paid. I would be happy to match the inspection “cost new” when you have the report back."

I feel like I will have bigger problems on my hands if there's a "total loss..."  But the lender replied that, "...typically you would never have a home over-insured for even the purchase price." So I just don't know what's going on.

When I asked the insurance agent to lower it or we'd look elsewhere he seemed surprised and offended. "I'm just looking out for your property." 

What is going on here...does anyone have experience with this sort of philosophy? I'm kinda thinking I should look for a new insurance broker and could be saving a lot of money. Thanks in advance.