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…

Answer 1

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, then the insurance coverage amount be based on the cost to rebuild the house.

Answer 2

The mortgage lender of course wants the full loan amount to be covered considering if something happens to the home their collateral for the loan is gone, but once the home has been paid off I am sure the insurance will then cover the actual market value of the home.