What is the minimum insurance amount for a dwelling unit in fee simple ownership?

• A. The original price paid by the owner
• B. $200,000
• C. The greater of the original price paid by the owner and $200,000
• D. The lesser of the original price paid by the owner and $200,000

Answer: (D)

In fee simple ownership, the minimum insurance amount is set to reflect the owner's actual investment while avoiding over-insurance. The rule is to require the lesser of the original price paid and $200,000. This means if you bought the dwelling for less than $200,000, the minimum equals your purchase price, ensuring you’re protected for your exact investment. If you paid more than $200,000, the minimum is capped at $200,000, providing essential protection without forcing you to insure at a level far beyond typical needs. The other options either would push for coverage higher than your investment in expensive homes or would under-insure cheaper homes.