When a borrower fails to obtain or maintain proper hazard, flood, or wind/hail insurance on property that secures a loan, the lender remains authorized to “force place insurance” on the property in order to protect the lender’s interest in the property. Sounds reasonable… right? On its face, it makes sense that lending institutions should have the right to make sure property securing a loan maintain adequate insurance in the event of a natural disaster or other hazard that property owners encounter.
Like so many issues with both high finance and insurance carriers, though, one can’t necessarily take force placed insurance at face value. In this initial installment of the Force Placed Insurance Series, I’ll take a closer look at issues surrounding force placed insurance.