Replacement or Cash Value

I have 5 rental properties and 6 houses I’ve sold on contract. My insurance guy has talked me into carrying replacement value insurance. Most of my monthly ins. cost average to be around $45-$50/month for most properties. I do have a 3 unit building on a main st. in a small town and ins. for that property is $114/month.

My insurance guy has always used the hail damage situation…replacement coverage would get me new roofs while cash value policies would mean a big out of pocket expense.

He also said most companies won’t insure for cash value.

I’d like to get some advice on this from you experienced investors.


I guess the question I would ask the insurance agent is how much your premiums would increase (and for how long) once you file that hail damage claim.

We can’t use Guide One anymore because they’re not going to offer insurance for rentals from now on…so our stuff is getting switched totally to Foremost. For properties where Guide One use to be $250/yr, Foremost will be closer to $400/yr.

We use ACV coverage because replacement cost would be cost prohibitive for insurance. Others may disagree…just the way we do it.

If you own a depreciated or older property or one that is built with materials that are no longer used (asbestos siding, lathe and plaster, etc.) and you do not plan to rebuild the house if it was destroyed, then you could opt for the cheaper actual cost policy. Nevertheless, it is highly recommended that you pay a little extra and opt for the replacement cost policy for most properties. In the event of a loss, you know that you will be fully covered.