There are a few circumstances under which a mortgage lender may consider force-placing insurance. For starters, if the homeowner does not have a homeowner’s insurance policy, the mortgage company will require some means of protecting their investment, and will hence force-place the insurance upon the homeowner, resulting in exorbitant costs. Another scenario is if a homeowner does have a policy, but it is the incorrect type or does not offer enough coverage to satisfy the lender’s terms. For example, a house in a flood plain will almost certainly require flood insurance, and if the homeowner purchases a policy that does not have flood insurance, the lender will almost certainly force-place the flood insurance for them.
Typically, the easiest way for a homeowner to get rid of force-placed insurance and go back to regular homeowner’s insurance coverage is to ensure they are up-to-date on making home insurance payments. Once they do so, the homeowner should be able to get a statement of evidence of payment from their insurer. Presenting this evidence to the mortgage company will require them to cancel the force-placed coverage. They should, in this scenario, also provide the homeowner with a refund due to their paying for duplicate coverage on the home. In the meantime, until the issue is resolved, the homeowner should continue to make payments on the force-placed insurance. All correspondence between the homeowner and the insurance company during this period should be carried out through certified mail so the homeowner can prove that such correspondences were received. If these correspondences do not work and the mortgage lender doesn't cancel the force-placed coverage, the homeowner should consider sending a QWR (Qualified Written Request) to the company that will force action within 30 days by the lender.
The moral of the story is that as long as the homeowner is making regular insurance payments and the coverage is deemed satisfactory by the lender, force-placed insurance should not be a concern.
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