Total Loss due to Fire

[Victoria Hunkin]

Hi,

Wanted to get feed back on my situation. My rental property caught fire Aug 31 in Kentucky, it is a total loss. It was vacant and no one was hurt.

The problem I am having is that my lender is making me pay off the loan for this property that is now a total loss. The insurance company is saying it cannot issue more funds aside from the initial payment which is not enough to pay off the loan.

I have a few questions:

1. Can a lender basically call my loan because of the total loss? If so, should there be something in writing like a contract that states this?

2. Is there a way to get more money from my insurance claim. My dwelling coverage is over $200,000 and the loan pay off is $79k. The adjuster is coming back with a initial pay out of $75k. I need the funds to pay for a full demolition because the city has ordered it which leaves me with only $56,700 to go towards paying the loan. Is there a way to have more funds released to help pay the loan? Adjust says they will only release more fund to go towards rebuild or purchasing a new home.

3. Should I seek a insurance attorney to help handle?

I just don't see how this is reasonable. My property is a loss and yet I'm having to pay for the loan yet I have insurance. Any tip, advice or help? TIA

Should I seek legal representation?

[Aaron Porter]

The only way it is a total loss is if you don't opt to rebuild.  your insurance if set up correctly should pay for the cost of rebuilding... unless you have actual cash value, in which case they will pay out the ACV (cost to rebuild minus depreciation)  this is why it is imperative that you have a good insurance agent who has your best interest in mind.  

It sounds to me like you need to get into contact with your agent, have them explain what your insurance will and won't cover and maybe hire a litigation lawyer to help you.  

Iit is hard to give anymore advice than that without looking at your policy, and the communication that you have had with both the insurance carrier and your lender.