Question

When Lisa purchased her house, the mortgage lender required her homeowner's insurance to cover 100% of the loan amount. After many years, Lisa paid off her mortgage. If Lisa decided to comparison shop for homeowner's insurance now, what should the insurance coverage amount be based on…

A) The cost to rebuild the house

B) The Market value of the house

C) The Original cost to build the house.

D) The appraised value of the house

Answer 1

A) The cost to rebuild the house

This is due to the fact that there is no outstanding loan amount since the mortgage has been paid off.