A Practical Exit Plan To Remove Force Placed Homeowners Insurance

A Practical Exit Plan To Remove Force Placed Homeowners Insurance

Force placed homeowners insurance often appears without warning. Many homeowners first learn about it when they see a higher mortgage payment, a new escrow shortage, or a letter from their servicer stating that coverage has been added. Although force placed insurance can cause confusion and stress, most homeowners can remove it quickly with a clear and structured plan. The entire process usually depends on securing the right replacement coverage, sending proper proof, and ensuring the servicer updates the loan records correctly.

This guide provides a practical, step by step exit plan that homeowners can follow to remove force placed insurance as efficiently as possible. It explains how to shop for replacement coverage, how to avoid common proof submission mistakes, how refunds work, and how to prevent force placed insurance from returning in the future.

Why A Clear Exit Plan Matters

Force placed insurance is usually more expensive and more limited than standard homeowners insurance. It often excludes personal property, liability coverage, and temporary housing benefits. Because it focuses on protecting the lender''s interest, not the homeowner''s needs, the sooner it is replaced, the better.

A clear exit plan is important because it helps homeowners:

Restore full coverage for themselves

Reduce their monthly mortgage payment

Correct escrow shortages

Avoid further backdating charges

Prevent future compliance issues with their servicer

Most homeowners can complete the exit plan in just a few steps.

Step 1: Determine Why Force Placed Insurance Was Added

Understanding why force placed insurance was added makes it easier to fix the issue. Common reasons include:

A non renewal or cancellation from a previous insurer

An old roof or inspection concerns

A lapse due to unpaid premiums or escrow shortages

Paperwork delays during renewal or refinancing

Incorrect or missing mortgagee clause information

Once the cause is identified, homeowners can decide which type of replacement coverage they need and avoid future lapses.

Step 2: Shop For Replacement Homeowners Insurance

There are three main options for replacing force placed insurance. The right one depends on the home''s condition, the homeowner''s insurance history, and local availability.

Standard homeowners insurance

If the home meets normal underwriting criteria, a standard HO3 or HO5 policy offers:

Dwelling coverage based on replacement cost

Personal property coverage

Liability protection

Loss of use coverage for temporary housing

This is usually the best option when the home qualifies.

High risk or excess and surplus carriers

Homes with older roofs, prior claims, or inspection issues may not qualify for standard insurance. High risk carriers often insure these properties and offer broader coverage than force placed insurance.

FAIR Plan coverage

In some states, FAIR Plans provide basic dwelling protection when no other insurer will write the policy. These policies can sometimes be paired with a companion policy to restore liability or personal property coverage.

Step 3: Bind The Replacement Policy

Once a suitable policy is found, it must be formally bound. A quote is not acceptable proof of insurance for the servicer. Binding the policy activates coverage for the home and generates the declarations page needed for removal.

Homeowners should verify:

The policy effective date

The property address

The loan number added by the insurer if requested

The correct mortgagee clause

The effective date is especially important because it determines whether the servicer will still backdate force placed charges.

Step 4: Prepare Proof Of Insurance For The Servicer

The proof package must be accurate and complete. Servicers usually require:

The full declarations page

The correct mortgagee clause exactly as listed in their notice letters

The loan number on the policy or in the submission email

Coverage dates with no gaps

If any of these items are missing, the servicer may reject the proof and delay removal.

Step 5: Submit Proof Through Multiple Channels

To ensure fast processing, homeowners usually send proof using at least two delivery methods.

Common submission methods include:

Email to the servicer''s insurance department

Upload through the mortgage portal

Fax using the number provided in the notice

A best practice is to send proof and then call the servicer to confirm that the document was received and is being reviewed.

Step 6: Confirm That Force Placed Insurance Has Been Canceled

Once the servicer accepts the proof, they will cancel the lender placed policy. Homeowners should verify:

The cancellation date

The amount of any refund

When the refund will post to escrow

When the next escrow analysis will be completed

If something appears incorrect, homeowners should request clarification immediately.

Step 7: Request A New Escrow Analysis If Needed

Force placed insurance often creates a significant escrow shortage. When the force placed refund is applied to escrow, homeowners may need to request a new escrow analysis so their mortgage payment decreases sooner.

Some servicers perform this automatically, while others require a request.

Step 8: Verify That Mortgage Payments Adjust Back To Normal

After the escrow analysis is complete, the mortgage payment usually reflects the updated insurance premium and corrected escrow balance. Homeowners should monitor their mortgage statements to confirm that:

The shortage has been reduced or eliminated

The new payment amount is accurate

No further force placed charges appear

If the payment is still higher than expected, contacting the servicer is important.

Step 9: Prevent Force Placed Insurance From Returning

Once force placed insurance is removed, homeowners can usually prevent future issues by:

Renewing homeowners insurance early

Sending proof directly to the servicer at renewal

Confirming receipt through the mortgage portal or phone

Checking escrow balances for shortages

Maintaining roof and property improvements that support insurability

Most repeat force placed situations occur due to paperwork delays, not lack of coverage.

Additional Tips For A Smooth Exit

Homeowners often have an easier time replacing force placed insurance when they:

Collect photos of the home for insurance shopping

Address minor inspection issues early

Keep digital copies of all declarations pages

Check the mortgage portal for insurance status updates

These steps help ensure a smoother transition and avoid misunderstandings with the servicer.

Frequently Asked Questions

How long does it take to remove force placed insurance

Most removals happen within a few business days after complete proof is submitted, although escrow refunds may take longer to appear.

Will replacing force placed insurance always lower my mortgage payment

Usually yes. Once the refund is applied and the escrow account is recalculated, the monthly payment often decreases.

What if I cannot find an insurer willing to write my home

High risk carriers or FAIR Plans usually provide options when standard insurers decline coverage.

Can I submit proof of insurance through the mortgage app

Many servicers allow this. Using multiple submission methods often results in faster processing.

Does force placed insurance go away automatically when I get new coverage

No. You must send proof of insurance to the servicer for cancellation to occur.