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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 market value of the house
B.The appraised value of the house
C.The cost to rebuild the house
D.The original cost to build the house

Respuesta :

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Answer is B. It must be the appraised value of the house. If lisa decides to comparison shop now after many years of holding the mortgage along with its insurance, the new insurance quotes should be based on a coverage amount only on the outstanding mortgage balance as the principal balance will have reduced significantly since the original mortgage inception date.
 

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