8 min read
Jan 15, 2025
Backdating and Escrow Problems With Force Placed Insurance
One of the most confusing aspects of force placed insurance is "backdating." This can cause sudden, massive escrow shortages.
What is Backdating?
If your insurance lapsed 3 months ago, the lender will buy a policy that starts 3 months ago to cover that gap. This means you are instantly charged for 3 months of premiums all at once.
The Escrow Shock
Because the premium is high and charged in a lump sum (or backdated), your escrow account likely goes negative. To fix this, your lender will increase your monthly mortgage payment to:
Pay the new, higher annual premium.
Repay the shortage caused by the backdated charge.
How to Fix It
Secure a new policy immediately. Send proof to your lender. They will cancel the forced policy and issue a refund for the overlapping time period, which will help correct the escrow balance.
Frequently Asked Questions
Can I get a refund for the backdated months?
Only if you can prove you had other insurance during that time. If you were uninsured, you typically have to pay for the coverage gap.
Related Posts
How to remove force placed homeowner insurance
A Simple Exit Plan That Often Works
Once you understand how you arrived at force placed coverage, the next goal is usually to replace it and restore full protection.
01
Secure New Coverage
Shop for a policy that fits your specific situation, whether through standard insurers or high-risk "excess and surplus" markets.
Ensure your new coverage restores the personal property and liability protection that force-placed policies often omit, and verify that dwelling limits are based on replacement cost rather than just your loan balance.
02
Submit Proof
To cancel the lender’s policy, you must provide a complete proof of insurance package.
This typically includes a full declarations page and the servicer's specific mortgagee clause—including your loan number—to prove your coverage meets the minimum requirements of your mortgage contract.
03
Confirm Cancellation
Once your servicer accepts the proof, they will typically cancel the force-placed policy and issue a pro-rated refund to your escrow account.
Monitor your account to ensure the refund is applied and that your monthly mortgage payment is recalculated to reflect the lower insurance costs.