Duplex insurance coverage

[Daniel Engstrom]

We are purchasing a duplex and are looking for general coverage advice on:

liability

deductible

replacment cost?

right now for a $60,000 duplex we were quoted at 1100/year with 1k deductible

[Eric Belgau]

Liability: I firmly believe that every landlord should have an umbrella policy. Ideally, you should have $1m in liability on the property policy and an additional $1m in an umbrella.

Deductible: Look at your situation. Determine the maximum amount you can come out of pocket, and make that your deductible.

Replacement cost: insuring a property for its replacement value means that the limit for your policy is set at approximately what it would cost to rebuild the property in a total loss. ACV (actual cash value) means that you insure the property for the depreciated value of the building materials.

Again, which one is better depends on your risk tolerance and financial situation. Assuming that you would rebuild the property if it were to burn to the ground, getting an ACV policy means that you are self-insuring for the difference between the depreciated value and the cost to rebuild.

If you can afford to do that, and if you don't mind retaining that risk, then you can save money on your premiums. Also, some property owners who insure for ACV plan to build something different (and less expensive to construct) in the event of a total loss.