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Updated about 1 year ago on . Most recent reply

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Matt Wells
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How much money should I insure my rental properties for with ACV and $10K deductible?

Matt Wells
Posted

I want to get the community's thoughts.  How much money should I insure my rental properties for with ACV (actual cash value) and $10K deductible? Should I insure for the capital I have in the homes or for how much they are currently worth? I have added value to all of my properties, and they have risen in value from appreciation. If the homes get destroyed I will not rebuild. I want my initial investment back and to move on to other opportunities. If there is a fire or whatever else, I will not claim unless the cost to repair is $20,000 or more. 

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Bill B.#3 1031 Exchanges Contributor
  • Investor
  • Las Vegas, NV
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Bill B.#3 1031 Exchanges Contributor
  • Investor
  • Las Vegas, NV
Replied

Make sure you’re not in an Hoa that would require you to rebuild. 
Make sure you allocate extra funds, maybe $50-$100k for demolition and removal. 

Lastly make sure this is worth the effort and the risk. I don’t see how you could be saving enough? What are your two quotes? I’m paying $6-800 for full bore RCV insurance with a $5k deductible on $450-$600k properties. If the payout if going to a hundred, or several hundred thousand less one claim in your lifetime would destroy any savings. 

Ps. When I looked at $5k vs $10k deductibles with was minuscule, maybe $50-$100/yr where it would take 50 -100 years to break even. I do feel like I’ve won with the $5k deductible though. 2 claims in 25 years with a dozen properties. Probably saving $200/yr per property is $2,4000/yr, breaking even every 2 years with a $200 deductible. 

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