What Is Force-Placed Insurance?

Force-placed insurance is an insurance policy that is put into place on a home where the property owner has had the insurance cancelled. This is put into place by a loan servicer, a lender, or a bank. It is also known as “lender-placed”, “collateral protection insurance”, and “creditor-placed”.

Other instances where force-placed insurance may be put into place is when the original owner’s policy has lapsed or their policy is considered to offer sufficient coverage. In short, it is a way that a lender may protect their level of financial interest in the named property. 

What Other Instances May Force-Placed Insurance Be Imposed? 

In some instances, a lender may elect to force-place insurance that covers flooding on homes that are located within known zones that are prone to flooding.

The next situation is when insurance on a vehicle lapses or if you fail to get insurance on a vehicle that has a loan on it. In either of these situations, a lender may feel that it is best to put force-placed insurance into place. 

What’s Wrong with Having Force-Placed Insurance? 

Insurance coverage is insurance coverage and, typically, any type of coverage is better than no coverage at all. Unfortunately, force-placed insurance is usually very expensive.

You can get a better price by shopping for the policy on your own. In addition to this, the coverage offered with forced-placed insurance is often quite limited. In other words, it may not cover your personal items or it may not offer liability coverage for the owner. 

What Do I Do if Forced-Placed Insurance Is Put on My Property?

If a lender has placed forced-placed insurance on your property, you must see – immediately – if you can have the old policy reinstated. If not, you should get a new policy at a better rate. In the meantime, you must make the payments on the insurance coverage that has been imposed on you.

Once you get the old policy reinstated or you get new coverage, you should then copy the proof of coverage and submit it and any other relevant documents to the servicer with a request that the forced-placed insurance be completely cancelled. 

What Happens if There Is a Dispute?

If a dispute develops, you would then need to send a Qualified Written Request or “QWR”. This should ask for any relevant information that is directly related to the loan servicing and/or information that disputes errors regarding the account that you have in place.

If the original policy was cancelled because the disbursements were not made in a timely manner out of the escrow account that you have in place, you will need to have a consultation with an attorney regarding the manner. 

Contact Us 

If you have had forced-placed insurance property on your home and you need a new policy, please contact us here at Modica Associates today.

We can assist you in obtaining the best rate policy for your needs. We consult with many agencies in order to get you the coverage that you need at the absolute best price. Call us now at the following number: 718-855-1836

Recent Posts