[wdfifteen]

Asking for a friend - what if he had a house whose market value was $800k and replacement cost was estimated at $1.2 million. Assume life has changed, kids are raised and gone, life is winding down. This big house is no longer need and if it burned down tomorrow it would not be replaced with anything even close to this size.
This couple is settled into this home and don't want to uproot their lives and move right away, but are planning to move to a place of a size that is selling for $500k at today's prices in 5 to 8 years.

Would you insure the house for replacement cost, or market value?
Market value $800k
Replacement cost $1.2 million