Which Type of Rental Property Insurance?

[Chris V.]

I am hunting for insurance for my first two duplexes!

After reading several forums posts and BP blog posts, I see that the main two methods people talk about are the Actual Cash Value and the Replacement Cost.

I'm a USAA member, and I have all of my insurance with them. They only support Replacement Cost policies. They quoted $200K for the dwelling coverage, and I can manually lower it to $153K (as low as it will go).

My questions are:

1. Should I just go with the Replacement Cost policy? If so, would you say save $9.50/month by lowering the dwelling coverage to $153,000 or maybe look for dwelling coverage that's even lower somewhere else?
2. Should I look more into the Actual Cash Value policy with another company? Any tips here?

Here are the details. Thanks for any help!

Property Information

• Purchased for $68,000 (maybe worth $72K)
• 1790 sqft duplex built in 1972
• Both units are 2 bed / 1 bath
• Exterior: mostly brick veneer with a bit of vinyl siding
• Flooring: tile in bathrooms, cheap laminate everywhere else
• Walls: 1970's wood pannel throughout, but mostly tiled walls in bathroom
• Roof: shingle (not sure of the type), inspection said the roof is on the "second half of its life"
• Foundation: crawl-space

Insurance Quote (if I lower the dwelling coverage)

• Calculated Rebuild Cost: $201,000
• Dwelling Coverage: $153,000 (I lowered it as much as possible)
• Personal Belongings: $2,500
• Other Structures: $15,300 (can't change)
• Personal Liability (each occurrence): $300,000
• Medical Payments to Others: $5,000
• Deductible: Other Covered Perils / Wind and Hail: $2,500 / $2,500
• Annual Premium: $472.55
  

Insurance Quote (if I don't lower the dwelling coverage)

• Calculated Rebuild Cost: $201,000
• Dwelling Coverage: $201,000 (didn't lower it here)
• Personal Belongings: $2,500
• Other Structures: $15,300 (can't change)
• Personal Liability (each occurrence): $300,000
• Medical Payments to Others: $5,000
• Deductible: Other Covered Perils / Wind and Hail: $2,500 / $2,500
• Annual Premium: $587.36