Loan Amount vs. Insured Amount

[Larry]

I saw similer posts, but none exactly like my problem. I have a regular home loan that includes the property and the manufactured home on the property. I currently owe about $90,000 on the loan. However, Foremost Insurance will only insure the manufactured home for it's current value according to them (around $78,000). The land is currently appraised at $32,000. The mortgage holder keeps telling me I'm under insured, because the insurance doesn't cover the amount I owe on the loan. It makes since to me that the home is insured, but the land isn't. However, doesn't seem to make since to the mortgage compnay. Any suggestions? Thanks.

[Mark]

Find a different insurance company and/or find a way to increase the value of your home (get your own appraisal for starters).

[Rich]

Basis RE Principles 101 will tell you that the lender's liability can not include the value of the land- it will always be there, even if you suffer 100% loss on the improvements (regular home or MH). I don't know who's underwriting your insurance, but I hope the lender isn't involved. Might be time to look for another lender, if this one continues to harp on your "under-insured" condition.

[Jim]

Get in touch with your state's Insurance Commissioner and let him know that your lender is trying to make you insure the land. In most states, that is illegal. A phone call or letter from the Commissioner's office should solve your problem. Like the previous message, the land is not going to burn down, or blow away, or rust, etc. It will always be able to be found on a map.