How much coverage needed??

[Lee Schram]

How much insurance coverage would you recommend? 

Purchase price 37,500

Rehab 45,000

Arv 150,000

The quote I received has dweling protection coverage of $425,000 and the policy is $6,000

is that right? 

Thanks 

[Michael Wagner]

For a house that is worth considerably less than the cost to rebuild you probably want to look at a ACV (actual cash value) policy. You can choose the amount of coverage you want including lost rents. Typically I get an amount close to the ARV minus the "cost to sell" if I were to sell it. That way, in a full loss I receive the same amount of money that I would have if I sold it rather than enduring the loss. I have had two fires and in each case, the ACV policy provided enough coverage to make me whole (or slightly better than whole). The downside with these policies is that sometimes partial losses are not covered adequately.