8 min read
Jan 15, 2025
How Claims Work Under Lender Placed Insurance
Filing a claim under a force placed policy is different from a standard homeowner claim.
The Lender is the Insured
Technically, the lender is the policyholder, not you. This means claim checks are often made payable to the lender or to the "Lender and Borrower."
Control of Funds
The lender will likely hold the money in a restricted escrow account. They will release funds in draws (installments) only as repairs are completed and verified by an inspector.
Limited Scope
Adjusters for force placed policies are strict. They focus on "structural integrity." They may not approve payments for matching paint colors or high-end finishes if they aren't necessary to protect the asset.
Frequently Asked Questions
Will I get the claim money directly?
Rarely. The funds usually go to the lender to oversee repairs.
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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.