Florida is a great state to live in. The weather is beautiful and there’s always something to do. But Florida is also a high-risk state when it comes to natural disasters. That’s why mortgage lenders will opt for a force-placed insurance policy if the homeowner doesn’t get the appropriate insurance for their property on their own.
Force-placed insurance, also called “credit-placed” or “lender-placed” insurance, is when your mortgage company or auto lender buys an insurance policy on your vehicle or home because you don’t have any coverage, it’s lapsed, or it isn’t enough. If this doesn’t sound too bad, please keep reading.
Florida homeowners should understand what force-placed insurance is and how it may impact them. This type of insurance can be expensive and may not provide the same level of protection as traditional homeowners insurance policies.
At Herman & Wells, our insurance claim attorneys can help you if you are in an insurance dispute or want to challenge a decision your insurance company has made. Call (727) 821-3195 today for a free consultation and we’ll review your claim.
The Cliff Notes: Key Takeaways From This Post
- 1Force-placed insurance is a form of coverage acquired against the home by a bank that holds the mortgage (mortgagee).
- 2It is generally more expensive and less comprehensive than regular homeowner’s policy, typically covering only the remaining amount due on a property loan.
- 3Homeowners insurance provides more comprehensive coverage than force-placed insurance and is often cheaper.
- 4Force-placed insurance can be expensive and may not cover items like damage caused by wear and tear, mold or rot, water damage, etc.
- 5Lenders are required to provide borrowers 45 days’ notice before purchasing force-placed insurance.
- 6Homeowners may be able to get their lender to cancel the policy if they can prove they have adequate coverage or get a refund of the premium if it was unnecessary.
- 7If unable to resolve, an experienced Florida insurance claim lawyer could help.
What Is Force-Placed Insurance?
It’s also known as lender-placed insurance or creditor-placed insurance, and it’s a form of coverage acquired against your home by the bank that holds your mortgage (sometimes dubbed the mortgagee). If your policy has expired or if the bank believes it is insufficient to safeguard its interest in your house, your bank may be compelled to force-place homeowner’s insurance on it. Standard mortgages entitle the lender to purchase insurance for the property owner under specific conditions. While this may appear as a safeguard for both you and the bank, there are some disadvantages associated with it.
It’s unfortunate that force-placed insurance generally costs more than regular homeowner’s insurance. The mortgage allows the bank to require evidence of insurance if they think your coverage has been canceled, is insufficient, or has lapsed, meaning you would have to pay more. In many circumstances, force-placed insurance may be much less comprehensive than a standard homeowner’s policy at a higher price. A force-placed policy, for example, might only cover the amount owed to the lender rather than the complete value of your home.
Who In Florida Would Need This Type of Insurance?
Force-placed insurance is not recommended for anyone. This type of insurance can be expensive and may not provide the same level of protection as traditional homeowners insurance policies. Florida homeowners should understand what force-placed insurance is and how it may impact you. This type of insurance can be expensive and may not provide the same level of protection as traditional homeowners insurance policies. Contact Herman & Wells today for a free consultation and we’ll review your claim.
How Does Force-Placed Insurance Compare To Homeowners Insurance?
It’s important for for Florida residents to be aware of the differences between force-placed insurance and traditional homeowners insurance. Homeowners insurance is a policy that people buy to protect their homes from damage. If something happens to your home, this policy can help you pay for the repairs.
Force-placed insurance, on the other hand, is a policy that is placed on a home by the lender when the homeowner does not have an active homeowners policy. This type of insurance is meant to protect the mortgage lender in the event that the homeowner does not maintain insurance on the property. As mentioned earlier, lender-placed insurance is usually more expensive than a standard homeowners policy and provides very basic protection. It only covers the remaining amount due on a given property loan.
Why It’s A Bad Substitute For Florida Homeowners Insurance
There are several reasons why force-placed insurance is not a good substitute for Florida homeowners insurance. One of the biggest reasons is that it’s much more expensive than regular homeowners insurance. In addition, force-placed insurance policies often provide less coverage than traditional homeowners policies. For example, a lender-placed policy might only cover the amount owed to the lender rather than the complete value of your home.
It’s also important to know that you, as the homeowner, are responsible for paying the premiums on a force-placed insurance policy. If you don’t pay the premium, your lender can add the unpaid amount to your mortgage balance – which will increase the amount you owe on your home.