8 min read
Jan 15, 2025
Force Placed vs Standard Homeowners Insurance: What Gets Covered
Many homeowners first learn about force placed insurance after a non-renewal or cancellation. When a mortgage servicer adds a lender-placed policy, the coverage might look similar to regular insurance at a glance, but the protections are very different.
What Force Placed Insurance Usually Is
Force placed homeowners insurance is designed primarily to protect the lender's financial interest in the structure. It is not designed to fully protect the homeowner.
Structure Only: The policy focuses on the dwelling.
No Liability: Liability coverage is often not included.
Limited Loss of Use: Coverage for temporary housing is usually limited or absent.
How Standard Insurance Works
A standard policy (HO3 or HO5) protects you. It includes dwelling coverage, personal property (contents), liability, and loss of use (ALE).
Summary
Force placed insurance protects the bank. Standard insurance protects you. If you are on a forced policy, your goal should be to replace it immediately.
Frequently Asked Questions
Does force placed insurance cover hotel stays?
Loss of use coverage is usually limited or unavailable in lender-placed programs.
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.