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Ask Shawn P. Adamo Your Own Question

Shawn P. Adamo
Shawn P. Adamo, CPA, Professor, CFP. CGMA, Business Consultant, Professor, PFS I have decades of experience answering these questions.
Category: General
Satisfied Customers: 2884
Experience:  CPA, Professor, CFP. CGMA, Business Consultant, Professor, PFS I have decades of experience answering these questions.
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I would like to have this question go to an insurance,

Customer Question

I would like to have this question go to an insurance, particularly homeowner insurance expert.
My spouse and I own a property(condo) in the East Coast. Property value is around $ 600 K and we have a mortgage debt of 350 K$ approx. I am afraid we are underinsured as the last value I saw for the property condominium insurance is the equivalent of slightly under $ 300 K per unit and perhaps less because we have one of the smaller units and there is a mix of townhomes and condos. (total is divided into 180 units approximately). Personally, we have loss coverage of around $ 85 K in an HO6 type condo policy (required by mortgage but we wnt higher than minimums required).
So total in our case of possible insurance seems to be around $ 250-380 K.
Question 1: I don't know how a claim would be apportioned if say there were a total loss?
Question 2:What happens with the mortgage in case there is a catastrophic incident with total loss, we still have 20+ years of payments ahead of us.
Question 3: If it is underinsured, what can be done in his regard that is reasonably affordable in your view?
Thanks
Submitted: 1 year ago.
Category: General
Expert:  Shawn P. Adamo replied 1 year ago.

1. Depends on if you have replacement cost or actual cash value.

2. The mortgage company gets the check for the amount owed and you get the rest.

3. You should obtain higher insurance amount.

I'll offer you a call to discuss in detail.

Customer: replied 1 year ago.

Sorry I didnt get back to you previously, what does the rest mean (in answer 2, you get "the rest")

Expert:  Shawn P. Adamo replied 1 year ago.

The excess dollar amount

Customer: replied 1 year ago.

can you please provide an example, if a house is worth 100 k, the mortgage owes 60 K(now) and it had an original mortgage of 100 k how much is paid out?

The problem here is that the total amount of policy is lower than the value of individual units multiplied by number of units

Thanks