Insure Rental at Replacement Cost

[Parker T.]

All,

I'm putting a bid on a foreclosure today at 30k. The insurance company quoted the replacement cost at 160k and with everything else factored in a quote of $94/m. This seems extremely high and doesn't fit into the 50% guideline. Do yall insure for full replacement value? Thanks.

PT

[John Chapman]

I don't do replacement cost anymore. I've recently adjusted my insurance practices to insure actual cash value at an amount necessary to pay off the lender if something catastrophic happens and the house is destroyed. I figure I can always sell for lot value. (I used to do replacement cost, mainly because of hail damage we get down here on roofs but I've decided as a matter of practice I don't want to be filing a bunch claims every time there is a hail storm.) I take the savings (the difference between replacement and ACV) and put that into savings account each month.