RENTAL PROPERTY INSURANCE

[Felecia Brown]

What do you guys typically pay for Insurance on Rental property? I pay $2004 per year for a SFH in Harrisburg PA. is this too expensive? Also includes pump and sewer backup $428, 000 rebuild value $500,000 Liability $42,000 Rental income loss (upto)

[Steve Babiak]

Although I usually advocate for RCV rather than ACV, for a 20K property to be rebuilt for 400K so you get 400K for RCV - that is crazy.  Ask your agent for a quote for ACV; if you go with ACV and you have a total loss, realize that the insurance payout won't rebuild that house for you - that is a case where you would raze the building probably and let the county tax claim bureau have that parcel for the tax sale. Then whatever payout remains, you use to buy another 20K property there or someplace else.

EDIT: And paying one tenth of the value for insurance is also crazy - you could self-insure and in about ten years you buy another one with the 20K you saved if you didn't have to pay yourself for a total loss.