Determining which option is the best for us. We have five rental properties and purchasing more.
Thanks, Tam
If you had a total loss, would you rather have the insurance company (A) pay you the depreciated value of the property, or, (B) pay to completely rebuild.
If you selected A, then go with the cash value policy.
If you selected B, then go with the replacement value policy.
What do you do?
For condos, where the association has a master insurance policy, I do cash value for the HO6 policy I purchase.
For townhome and SFR properties where I am the only one insuring the building, I purchase a replacement cost policy.
The cash value policy does not change coverage limits each year, and premium increases are fairly moderate. The replacement cost policies adjust the coverage limits based upon the insurance company’s estimate of the cost to rebuild. Premium adjustments reflect the change in coverage limits.
Thank you – I guess replacement values are usually higher than market value unless it is an elevated market like a few years ago. Is there such a thing as an umbrella policy for all of our SFHs that would be less expensive?
I have an umbrella liability policy for multiple units.
I am not aware of an umbrella hazard insurance policy. Each little house has its own policy.
Anyone else?
Furnishedowner
Umbrella policies are for liability only as far as I am aware.
Replacement value depends upon the cost to rebuild your property. The replacement value does not include the cost of the land, but just reflects what the insurance company estimates what it will spend to rebuild the dwelling structure on the same lot. Market value may be higher, even in this depressed real estate market.