How much/type of insurance is right for a 2unit in Philadelphia?

[James Corr]

Hey BP, 

My wife and I are purchasing our first property with the goal of purchasing more in the next 12 - 18 months. While we are young, this is our first property and we're somewhat risk adverse. At the same time, we're using FHA 3.5% down and don't have any other assets worth mentioning. I'm wondering where the line is between too much and too little insurance?

Here are some details about the property:

- Approx value of property = $600K

- Located in Philadelphia, in Queen Village / Headhouse area

- Appraisal came back $2K higher than the contract price

- Passed inspection with nothing major

- Built in 1925

- Two units, one is a 2 x 1, one is a 2 x 1.5. We plan to live in the 2 x 1.5

Based on what I've learned so far I'm looking for a policy that has:

- Landlord Dwelling for the entire building (i.e. both units) for actual cost value, not cash replacement (although I'd like to see the cost difference for both to understand it)

- Liability insurance, up to $1M per occurrence

- No or little co-insurance

- Other considerations but not certain: loss of rents, sewer backup (one unit has a legal subterranean living space, seems like a good idea to have this), terrorism and political violence (due to where this property is [a popular tourist area of Philadelphia], we'd consider this)

So far I've been given two quotes, one from an insurance agent that our partners with our realtor for both home and auto but this doesn't even feel relevant so I'm not going to provide any details and one via Travelers from Steadily, this one is attached for reference. 

[John Mocker]

James,

Based on your earlier post "I currently have a duplex under contract and am working on getting insurance for the property. This will be an owner occupied house hack where we live in one unit and rent the other..."  The quote you posted is the wrong form.  As the building will be owner occupied the proper form is a Homeowners policy.  Generally the Dwelling fire form is used for non-owner occupied 1-4 family dwellings.  

Another thing I noticed is that you are using the purchase price for the Building limit.  The building limit should be the cost to rebuild the structure (excluding the land) and is referred to as the Replacement Cost (RC).  The RC is calculated using the sq footage, construction, # baths, # of kitchens, features (flooring, wall covering, ..), and location.  Based on the house being 2000 sq ft. that would give a $300 per sq ft rebuilding cost.  That may be accurate but you should have the agent re calculate it when they correct the quote to a homeowners policy.

If I can help with any other questions please do not hesitate to PM me.  Good luck on the new house.