Question about Homeowner's Insurance

[Rob Bianco]

Quick background: I own all my units in cash and plan to refinance once COVID-19 blows over

I currently have a policy on each property the pays out on an Actual Cash Value basis. Coverage limit is based off of the purchase price. My average premium is roughly $1500 per property with a $1000 deductible.

However, a buddy of mine recently had an electrical fire and his whole investment burned to the ground, so now I'm thinking I should have better coverage, but it's rather expensive where claims are paid on a replacement cost basis which would run about $2650

As far as I understand it, my policy would cover a lot of the cost of replacing things like a roof or damage from natural disaster or fire etc... but not 100% whereas the replacement cost policy would simply cover all costs at the expense of devouring my cashflow.

I'm just wondering what most people have and what someone would recommend?

[Lynnette E.]

I have a replacement cost policy.  You can reduce the premium by increasing the deductible.  Depending on the amount of cash you are willing to put into fix the damage before the insurance kicks in it may be worth it to switch to a replacement policy with a higher deductible.  Ask you agent to run the policy cost with various deductibles.