The most consequential term on a landlord policy is not the limit. It is whether the building is settled at what it costs to rebuild or at what it is worth after depreciation.
Actual cash value on a dwelling subtracts depreciation from the building itself. On an older rental that is a large number.
Three things about how a building claim is settled.
Replacement cost pays what it takes to rebuild. Actual cash value pays that figure minus depreciation for the age and condition of the building. On a twenty-five year old rental that deduction can be very large, and the two policies can carry the same dwelling limit while producing completely different checks.
Where a landlord policy is noticeably cheaper than another, the settlement basis is one of the first places to look. It is not a trick, it is a different product, and it is worth comparing on that term rather than on premium alone.
Even on a replacement cost policy, the roof can be endorsed to settle at actual cash value once it passes a certain age. On a rental you are not inspecting monthly, that endorsement decides the outcome of the most likely large claim.
The term that decides the check.
Replacement cost or actual cash value. One line, large consequences.
Frequently it is, and frequently nobody mentioned it.
The basis is only useful if the limit is right too.
Send your current declarations. The settlement basis is one line and it matters most.
