Posted by Rich-CA on October 08, 2007 at 20:02:18:
I carry Farmers on my properties in CO and they are on a replacement cost policy. It a commercial policy which covers multiple properties on a single policy and the coverage is better than I get with individual “landlord” policies. I have the same policy in AZ and TX and the coverage has been fantastic.
Insurance question. I have a property i owe about 140k on and i have a lady that wants to buy it for 220k on a Land Contract with 10k down. I have it insured for 185k. What happens if it burns to the ground? Do i need to up my insurance to 220k? Or 210k?
Posted by Rich-CA on October 08, 2007 at 16:24:27:
Ask your agent for the “replacement” cost on the building (you do not need to insure the land). The insurance won’t cover things like earth movement, fences and retaining walls - so there is no way to insure that anyway. Replacement cost is independent from the market value and ensures if anything happens you can restore it.
From my personal experiences, some insurance company in some state (State Farm in Colorado, for one) does not offer “replacement” cost insurance. In that situation, it is wise to consult with the insurance agent periodically (once a year, at the time of renewal) for the maximum amount insurance should cover. As Rich wrote, there’s no need to cover the land. Just the building cost.