Property insurance- what would you do?

[Jeremy D.]

My insurance agent just informed me that the insurance co is switching a couple of my policies from RC to ACV coverage due to the age of the buildings (they're about 100 yrs old). I'm interested in what experienced investors would do in the following example:

I bought the 2 unit property for $100k in 2009. Market value right now is $120k. Mortgage balance is $70k. The insurance company says replacement value is $330k.

My thought is that it does not make sense to get an ACV policy at $330k. If the property burned down i'd be fine clearing the lot and trying to sell that. So, my thought is to do an ACV policy at about $130k ($120k market value plus a little to clear the lot if the property was destroyed).

Thoughts?

[Bill Gulley]

Beware of any co-insurance clause too, if you insure less than 80% of the replacement value they will claim you self insured the difference and pay 80 or less % on any loss.

You need to show the rehab work over the years, lucky to get anything on a 100 year old building as some underwriter could be thinking of knob and tube wiring, lead pipes, asbestos, lead paint and so on, all the hazards adding to risks.

Like Jerry said, go shopping! :)