This endorsement applies with respect to the home when the insured has a covered total loss and American Modern has not replaced the home.
When our payment for the home loss, as covered by the policy, is less than the outstanding principal loan balance, American Modern will also pay the lienholder the difference, not to exceed $10,000, between our payment for loss amount and the outstanding principal loan balance.
Outstanding principal loan balance means the unpaid amount the insured owes their first lienholder as listed on the policy, less payments more than 30 days past due, unearned interest, insurance, finance and other carrying charges computed actuarially as of the date of loss. Any penalties or other charges which may have been added to a loan after the loan was finalized, will not be covered by this endorsement.