We had a situation where the outside auditor stated that the bank could not aggregate the two flood policies together to ensure coverage amount.
We have a customer who has 1 parcel with 2 dwellings on it. The one house has a value of 89,000 (insurance coverage amount being 54,000) and the other has a value of 93,500 (insurance coverage amount being 10,000). The balance of the loan is only 49,000. So, the two policies, totaling 64,000, cover the amount of the loan, but the external auditor is saying that we cannot add them together.
So, I am not sure if we should be taking the value of the dwellings separately and subtracting the value of the land to get the coverage amount or following the way I described above.
Neither one of the policies indicates replacement cost value...this loan was done a number of years ago.