Lender-Placed Hazard Insurance
A Lender-Placed Insurance Program is a vital insurance solution to any sized financial institution. Lender-Placed Insurance helps to alleviate risk and protect the loan portfolio of a financial institution from uninsured losses.
In the event the insurance on a borrower’s loan lapses, cancels or is deemed inadequate, a lender may force-place insurance coverage.
The following are a few examples of when a lender may force-place insurance coverage:
- The borrower does not currently have an insurance policy, either because they did not purchase a policy, or because the policy was cancelled after the renewal premium was not paid.
- The lender has not received proof of insurance coverage (even though the homeowner may have coverage in place.) Once a lender receives the proof of insurance, the force placed insurance coverage can then be canceled. After the force-placed coverage is cancelled, the borrower will only be billed for the time they were without insurance.
- There is an insurance policy in place, but the amount of coverage amount, deductible, or type of coverage does not meet the lender’s requirements.
Force-Placed Insurance is a policy that is ultimately meant to protect the lender from uninsured losses, and will not typically provide coverage for the borrower’s personal property. The purpose of lender-placed insurance is to provide immediate coverage on uninsured collateral (property/dwelling). A lender utilizes force-placed insurance to ensure that their collateral is insured in the event there is property damage or loss