Under the homeowners form, replacement cost coverage for buildings with no depreciation is provided if the insured buys a limit at least what percent of the building's ACV?

Under the homeowners form, replacement cost coverage for buildings with no depreciation is provided if the insured buys a limit at least what percent of the building's ACV?

• A. 60 Percent
• B. 70 Percent
• C. 80 Percent
• D. 90 Percent

Answer: (C)

The key idea is the coinsurance rule in the homeowners policy. To receive replacement cost coverage without any depreciation on the dwelling, you must carry insurance equal to at least 80% of the dwelling’s replacement cost value. This 80% threshold ensures you aren’t underinsured and qualify for full replacement cost payments up to your limit. If your coverage is less than 80%, the insurer reduces the payment proportionally based on how much you were short. So, the minimum percent needed is 80%.

The key idea is the coinsurance rule in the homeowners policy. To receive replacement cost coverage without any depreciation on the dwelling, you must carry insurance equal to at least 80% of the dwelling’s replacement cost value. This 80% threshold ensures you aren’t underinsured and qualify for full replacement cost payments up to your limit. If your coverage is less than 80%, the insurer reduces the payment proportionally based on how much you were short. So, the minimum percent needed is 80%.