|(a) All proceeds received for insurance losses must be deposited
with the board. These proceeds may be used to repair or replace the damaged
or destroyed improvements, or they may be applied to the principal balance
of the veteran's account.
(b) Normally, when there has been a loss the insurance company
will issue a check jointly payable to the veteran and the board. The veteran
should endorse the check and forward it to the board. The proceeds will be
held in a special account until the damaged or destroyed improvement has been
repaired or replaced, or until it has been determined that the proceeds are
to be applied to the principal balance of the veteran's account.
(c) If there has been a partial loss, repairs shall be made
in order to prevent further deterioration. If the loss is total, the veteran
will have the option of rebuilding the improvement or applying the proceeds
to the principal balance of his account. If applying the proceeds to the principal
balance of the account pays it in full, any unused funds will be refunded
to the veteran, or his or her designee, as soon thereafter as practicable.
(d) When an improvement is repaired or replaced, and the loss
is under $500, the veteran should:
(1) submit to the board itemized statements showing the materials
and labor furnished; and
(2) submit to the board an affidavit showing that all of the
materials and labor specified in the statements were actually used in the
repair or replacement of the improvement.
(e) When an improvement is repaired or replaced and the loss
is over $500, the veteran should:
(1) submit to the board an itemized statement showing the materials
and labor furnished; and
(2) allow sufficient time for the board to make a physical
inspection of the repaired or replaced improvement.
(f) Reimbursement from the insurance proceeds may be made directly
to the veteran or his creditors. If reimbursement is to be made to the veteran,
the itemized statements mentioned in subsections (d)(1) and (e)(1) of this
section must show that payment has already been made by the veteran. If reimbursement
is to be made to the creditors, the veteran must authorize the board in writing
to pay the creditors.
(g) Reimbursement can be made only when the damaged or destroyed
improvement has been repaired or restored.
(h) If proceeds from insurance losses are not completely used
in restoring improvements to their original condition, the remaining balance
on deposit will be applied to the principal balance of the veteran's account.
(i) The application of insurance proceeds to the principal
balance of the veteran's account shall not relieve him of the obligation to
make the regular installment payments.