Homeowners insurance to cover dwelling replacement

[Joel Scheffler]

Hello everyone.

We are in the process of purchasing a four-plex and we were met with a rather large surprise.  While getting quotes for our homeowners insurance, the first one came back more than double what we had planned with ($4300 versus $2000).  We have used this same agency in the past for other rentals and personal insurance and they have been competitive.

We are being told that the bulk of the cost is coming from the 'dwelling replacement cost'.  This particular house was built specifically as a four unit as opposed to a conversion from a single family home.  Purchase price is $390,000 and replacement cost is $590,000.

Just looking for some feedback if anyone else has come across this and what they have done.  We are obviously shopping the insurance, so any recommendations on reputable insurance agencies in the Grand Rapids, MI area.