If the original purchase price was 250,000, what is the minimum insurance?

• A. 250,000
• B. 200,000
• C. 300,000
• D. 100,000

Answer: (B)

Minimum coverage is typically set to at least 80% of the home's value to avoid under-insuring. With a value of 250,000, 80% equals 200,000, so the smallest amount you should insure for is 200,000. Insuring for less would leave you underinsured and could reduce any payout if you had a claim; insuring more would meet higher coverage needs but isn’t the minimum.