Question

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

Answer 1

The cost to rebuild the house.

Answer 2

I think that the  insurance coverage amount should be based on the appraisal value of the house. Appraisal value is an evaluation of the value of property based on a given point in time. This evaluation is done by an appraiser who is chosen by the lender.