Approximately how much should I be insuring my 8-plex for?

[Jennifer Rysdam]

Hi everyone! I bought an 8-plex in SW MN in April. I paid $175,000 for it. It was insured for $520,000, so I just stuck with that number for my policy too. Is that a reasonable number? Do I really need that much? It's a 6500 square foot building and I'm currently paying $3000 per year for insurance.

Thanks!

[David S.]

I like to insure close to construction costs or for what I could rebuild it for.  The insurance company can provide you with the construction costs per square foot.

The question is: If you have a major incident and you have to rebuild from the ground up, are you prepared to come up with the difference, even if it is several hundred thousand dollars?  Or would you even rebuild it? Would you just take the insurance money and sell the empty lot?  The answers to these questions should point you in the right direction.

I am not to familiar with your area, but mine would be about $100 to $120 or more per square foot construction costs using a GC, putting the coverage amount to at least 650K.  You could sub it out yourself for much cheaper, assuming it is allowed in your area and you are qualified.