We have a loan with flood insurance that was recently determined to be short on the flood insurance coverage. We are going through the process of initiated force placed insurance. However, do we force place for the entire amount needed or just the amount that makes up the shortage?

I had an understanding that there could not be more than one flood insurance policy in place at any one time but then I read the following: If a borrower fails to obtain the required amount of flood insurance coverage upon notification by an institution or its servicer, the amount that must be force placed is equal to the difference between the present amount of coverage, if any, and the lesser of the outstanding principal balance or the maximum coverage limit.

You cannot have two NFIP policies, but you could force place a private policy. If you need $200,000 and they have a $150,000 NFIP policy, you would force place a private policy for $200,000 with a $150,000 deductible.

That is if you can find a private insurer to do that.

Underinsured is the most difficult situation, as if you are unable to do that, then about your only other option is to call the loan.