over-insured? under-insured?

[Yi Tang]

Hi,
What's the rule of thumb to decide how much coverage we should buy for residential rental property such as 4plex?

The insurance premimum seems to close correlate with the dwelling coverage. To reduce the premium, obviously I don't want to over-insure my property.However, I don't want to under-insure it either.

For a 4plex with purchase price of $120K, I compare the quote from two insurance agents. One asks for $1000/year premium with 450K coverage assuming $150/sqrt feet re-build cost. While the other one asks much lower premium of $600 assuming a $70/sqrt re-build cost.

So I am wondering what's the coverage real estate investor generally feel comfortable with?

Also, should I also make sure the liability coverage is enough?(maybe liability coverage is even more important than building coverage?)If so, what would be enough liability coverage, $300K? $1M? assuming the property will be hold in a LLC.

thanks in advance for your input!
Merry Christmas!