Learn personal and professional finance terms to keep you in the know
Force-placed insurance, also known as lender-placed insurance, is a homeowners policy that your mortgage lender purchases on your behalf if your own coverage lapses or fails to meet the requirements of your loan agreement. Because lenders have a vested financial interest in protecting the property securing your loan, they are entitled to ensure it remains protected at all times. However, force-placed insurance typically costs significantly more than a standard homeowners policy while providing far more limited coverage, protecting only the lender's interest rather than your personal belongings or liability. The premium is usually added to your monthly mortgage payment. The best way to avoid force-placed insurance is to maintain continuous coverage and promptly notify your lender when you switch policies.
