Finding the balance between insurance coverage and CAPEX/maint.

[Chris Piette]

Good afternoon everyone,

I'm currently in the process of closing on my first rental property, and am applying for and selecting insurance coverage's. I'm looking for some advice from the seasoned investors and insurance experts.

I've got a quote that actually beat my pro forma, however just like anything they are now offering the "add-ons" and upgraded coverages (service line coverage and equipment break down coverage to be specific).

So my question is, where do you draw the line between coverage's that can save your butt if something were to go wrong, and where can you save a dollar here and there and rely on your Maint/Capex/cash reserves to cover the unforseen issues in owning a rental.

Also if anyone is so inclined, if any, what are THE additional coverage's to get when insuring a rental?

Thanks!

[Terrell Garren]

As you build wealth, you can accept additional 'smart' risk.  

If I were 25 years old with minimal savings and 1 rental property, I would get basic coverage for replacement value with a lower deductible and higher premium.

I am a 60 year old guy with 20 SFHs and healthy savings, so I ensure for actual cash value at 70% of market value with the highest deductibles and lowest premiums. My logic is - a house disaster is usually not a total loss.  If it is, I can afford to cover the difference.  Insurance companies are in the business to make money.  You can save the same money when you can afford to assume smart risk. Best, Terrell