Insurance - ACV vs. Replacement Cost policies

[Payton Gonzales]

In contract on a 4-plex right now in Ohio that was built around 1930.  For background, there is some termite damage on it,that should be taken care of prior to close, as well as some other minor fixes to the roof, basement, etc.

I received a quote for the building for an After Cost Value (ACV) policy, which was about 40% of the Replacement Cost policy.  

I understand the question is more on my tolerance for risk, but what are folks' thoughts on the difference between the two types of policies for investors?

Thanks in advance for any replies!

[Michael Badin]

@Payton Gonzales  As you said, it comes down to your tolerance for risk.  However, I have been an insurance adjuster for 15 years, I have replacement cost on ALL my properties, both personal and investment.  Yes it does cost more but should a catastrophic loss occur it will be worth it.  I have seen too many times were people have not had enough coverage and had their property fall into disrepair or could not rebuild after a fire.

With that said it does depend on the property you are insuring, if you are talking about a property that is only worth $10,000 RCV than I would not worry about the difference.  It's the properties worth 6 and 7 figures I would worry about RCV, or even high 5 figures depending on your risk tolerance.