Virginia Code 6.2-412: Insurance coverage under certain loans not to exceed replacement value of improvements
A. As used in this section:
Terms Used In Virginia Code 6.2-412
- Appraisal: A determination of property value.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Deed: The legal instrument used to transfer title in real property from one person to another.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
“Flood insurance coverage” means insurance against loss or damage to any property caused by flooding or the rising of the waters of the ocean or its tributaries.
“Property insurance coverage” means insurance against losses or damages caused by perils that commonly are covered in insurance policies described with terms similar to “standard fire” or “standard fire with extended coverage.”
B. No lender shall require a borrower, as a condition to receiving or maintaining a loan secured by any mortgage or deed of trust, to provide or purchase property insurance coverage or flood insurance coverage against risks to any improvements on any real property in an amount exceeding the replacement value of the improvements on the real property.
C. In determining the replacement value of the improvements on any real property, the lender may:
1. Accept the value placed on the improvements by the insurer; or
2. Use the value placed on the improvements that is determined by the lender’s appraisal of the real property.
D. A violation of this section shall not affect the validity of the mortgage or deed of trust securing the loan.