Final answer:
The correct option is A) PMI (Private Mortgage Insurance).
Private Mortgage Insurance (PMI) provides coverage for the upper part of a residential loan in case of default, safeguarding the lender if the borrower fails to make payments. It's generally required for mortgages with down payments less than 20%. Other types of insurance, like HOI, LMI, and Title Insurance, serve different purposes.
Step-by-step explanation:
The insurance that provides coverage for the upper part of a residential loan in the event of default is known as Private Mortgage Insurance (PMI). It is designed to protect the lender in case the borrower stops making payments. When a borrower obtains a mortgage with a down payment that is less than 20% of the home's value, the lender typically requires PMI.
Homeowners Insurance (HOI) protects the homeowner from damage to the property from events like fire or theft, and does not provide coverage for mortgage defaults. Lender's Mortgage Insurance (LMI) is similar to PMI, but is more commonly used in countries outside of the United States. Title Insurance protects against issues with the property's title, not mortgage default. An insurance premium is the amount paid, often on a monthly or annual basis, for the coverage provided by an insurance policy.