How much Home Insurance Coverage?

[Luca Giani]

hello everyone,

I am trying to find the right tune between cost of premium and coverage. It's my first rental property so I am just asking for advice that might sound stupid but I will do it anyway :-)

The general question is: going for the max coverage or trying to save on the monthly premium? And what are the coverages that I should pay more attention to?

[Greg Kasmer]

Luca - When it comes to rental property insurance some key questions on coverage are:

Actual Cash Value / Replacement Cost - Replacement Cost is what is costs to rebuild the home and is generally more expensive and has better coverage (more $$). I typically use that as it's a "worst case scenario" coverage for me in case the house burns down because I know I have the money to rebuild. 

Deductible - I started out at $1,000 or 1% of value, but recently have increase that to something higher 2% to keep my premiums more reasonable lately as rates have gone up.

Rental Income Loss - I usually have this on my policy as if their is a major loss I know I can obtain coverage for income loss during the repair/renovation if I didn't collect rent.

Sewer Line Coverage - I don't have that on my policy, but more recently I wish I did. I've had two homes with sewer lines that needed to be replaced and wish I would have obtained that coverage.

Lastly, I'll state that obviously depending upon your area you may also need flood, wind, etc.. coverage. I don't have them because I don't need them, but I know those are big variables as it relates to the premium.

At the current moment, most of my home values are between $150-200k and I pay about $1,000-1,200 per property per year. That's my sweet spot that I've comfortable with. Hope this helps!