Insuring your property- Using Actual Cash value vs Assessed

[Daniel Gupta]

Hey guys! Curious what you think on this one.. I have recently obtained a couple houses at a $180k for both purchase price($90k each.) Insuring both of these properties at their assessed value (375k, 285k aprox) would run me 7200 a year. I could also insure them at 'Actual Cash' value and get them insured for $175k each for only 4500 a year. I am into them well, so even at ACV If both would be destroyed, I would still be up on them- but what do you guys think? $2700 is a lot of additional money for insurance!

Thank you

Dan

[Jason Bott]

@Ken Teng CA insurance premiums are low compared to Midwestern states that have frequent Wind/Hail claims.

@Daniel Gupta A few points to consider to clarify your risk.

1)  can you get the building values any lower than $375 & $275 and still keep Replacement cost? 

2)  Are the buildings newly updated or older?  An ACV policy will not penalize you much if its a newer building.  On the other hand, if there have not been much for updates, you will be getting pennies on the dollar when you do have a claim.  These answers should clarify if the $2,500 in savings is a good exchange for retaining the extra risk.