8 min read
Jan 15, 2025
Force Placed Homeowners Insurance - A Practical Guide
Force Placed Homeowners Insurance - A Practical Guide
Force placed insurance (also called lender-placed insurance) is a policy your mortgage lender purchases when they believe your home is uninsured. While it ensures the lender's financial interest is protected, it often comes with higher costs and limited coverage for homeowners.
Why It Happens
Lenders require continuous insurance coverage on mortgaged properties. If your policy lapses, is cancelled, or if you fail to provide proof of insurance, the lender has the legal right to purchase a policy for you and charge the premium to your escrow account.
Key Differences
Cost: Often 2x to 10x more expensive than standard insurance.
Coverage: Typically covers the structure only (dwelling), not your personal belongings or liability.
Beneficiary: The policy is designed to protect the lender, not you.
If you have received a notice about force placed insurance, immediate action is required to avoid unnecessary costs.
Frequently Asked Questions
Is force placed insurance more expensive?
Yes, it is often significantly more expensive than a standard homeowners policy.
Does it cover my furniture and clothes?
Usually, no. Force placed policies typically exclude personal property coverage.
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.