Andy and Ann live in a home with a replacement value of $164,000 and a market value of $175,000.In most cases,what is the minimum amount of homeowner's coverage they must carry to meet the replacement-cost requirement?
A)$140,000
B)$175,000
C)$164,000
D)$131,200

Question

Quizplus · Accepted Answer

To meet the replacement-cost requirement, the minimum amount of homeowner's coverage they must carry is equivalent to the home's replacement value. Therefore, the minimum amount of homeowner's coverage Andy and Ann must carry is $164,000. However, it is worth noting that some insurance companies may require coverage of up to 80% of the home's replacement value, meaning they would need coverage of $131,200 or more. So, the best choice would be D, $131,200, which is the lowest amount that may meet the coverage requirements of some insurance companies.

Andy and Ann Live in a Home with a Replacement