9 min read
Jan 20, 2026
How To Remove Lender-Placed Insurance And Usually Get a Refund
How To Remove Lender-Placed Insurance And Usually Get a Refund
If you’ve discovered lender-placed insurance (also called force-placed insurance) on your mortgage, you’re not alone—and you’re not stuck. This type of coverage is commonly added when a lender believes your homeowners insurance lapsed or didn’t meet their requirements. While it’s often expensive and limited, the good news is that it can usually be removed, and in many cases, you may be entitled to a refund.
This guide explains how lender-placed insurance works, how to remove it, and what typically determines whether a refund is issued.
What Lender-Placed Insurance Is (And Why It Happens)
Lender-placed insurance is a policy your mortgage company purchases to protect their financial interest, not you as the homeowner. It’s typically added when your homeowners insurance policy lapses or is canceled, proof of insurance wasn’t received or processed, coverage didn’t meet lender requirements, or a billing or escrow issue caused a missed payment.
Importantly, lenders usually do not add this coverage arbitrarily. In most cases, they believe—rightly or wrongly—that the property is uninsured or underinsured.
Why Lender-Placed Insurance Is So Expensive
Homeowners are often shocked by the cost, but there are a few reasons for this. Coverage protects the lender only, not your personal interests. Policies are typically non-competitive and non-customized. Premiums are often charged retroactively. There is little incentive to price-shop because the lender passes the full cost to you.
The 3 Steps To Remove Lender-Placed Insurance
1. Secure Your Own Homeowners Insurance Policy
You cannot simply cancel force-placed insurance without replacing it. You must buy a standard homeowners policy (HO-3 or similar) that meets your lender’s minimum coverage requirements.
2. Provide Proof of Insurance to Your Lender
Once your new policy is active, send the Declarations Page (not just a quote or binder) to your mortgage servicer immediately. Most lenders have a specific email address, fax number, or online portal for insurance documents.
3. Request a Refund of the Force-Placed Premiums
This is the most critical step. If you can prove that you had continuous coverage (meaning there was no actual lapse), the lender must refund 100% of the force-placed premiums and fees.
Will You Get a Refund?
If there was no lapse in coverage: Yes. If you had your own policy the entire time but the lender simply didn’t have the paperwork, they are required to reverse all charges once proof is provided.
If there was a genuine lapse: Maybe. If you went 30 days without insurance, you will likely have to pay the pro-rated cost of the force-placed policy for those 30 days. However, once your new policy starts, the force-placed coverage will be canceled moving forward, and any unearned premiums will be refunded to your escrow account.
Frequently Asked Questions
Can I just cancel force-placed insurance without buying a new policy?
No. Your mortgage contract requires you to maintain hazardous insurance on the property at all times.
How long does the refund take?
Once proof is verified, refunds typically appear in your escrow account within 1-2 billing cycles.
Does force-placed insurance cover my personal belongings?
Usually, no. It generally covers only the structure of the home, leaving your personal property and liability unprotected.
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.