MF Insurance: Actual Value vs. Replacement Value Opinions

[Konrad L.]

Hello Everyone,

I will be closing on my first MF investment property in about two weeks.  One of the things left is to pick out homeowner's insurance.  I've been shopping around and have gotten different quotes for Replacement Value policies.  However, yesterday, an agent brought up an option of an Actual Value policy. 

The house is a 3-family built in 1890 in central CT and has almost 3,800 sq.ft. Purchase price is $163k.  Because of the size and age of the house, the RV quotes I've received were pretty high:

USAA - Replacement Value @ $938k; $2,950 annually, but agent said they will send out an inspector to do an on-site RV appraisal and there's a chance it might be lowered.

Travelers - RV @ $923k; $2,933 annually

Liberty Mutual - RV @ $718k; $2,128 annually

The agent I talked to yesterday told me about the AV policy through Foremost and told me if they will value it at $200k, my annual premium should be around $1,400, which is a big difference.  

The house is not in the best neighborhood and I think the highest priced house on the street is about $180k, so if something was ever to happen and I had the RV policy, having this house rebuilt for 700k or 900k doesn't make sense to me.  It would only be work maybe 250k in that neighborhood, at the most.  In this situation, would it make sense to take the AV policy?  

What if I just need repairs due to a branch falling on the roof or water damage due to burst pipe?  Do both cover the same way, aside from a total loss instance? 

Are liabilities brought by my tenants covered the same way, given that the coverage is the same?

Looking for opinions and expertise.

Thanks in advance - Konrad