While insurance protects a home or property owner in case of natural disaster damage or other loss, they are not the only ones at risk if insurance lapses or is inadequate. Mortgage lenders are also at risk if an owner cannot repay a loan if a loss occurs that insurance cannot cover.
Here is why force placed insurance is becoming increasingly more important and how it can benefit lenders and property owners when homeowners or property insurance is no longer adequate or cannot be obtained.
The Importance of Force Placed Insurance
While lenders have long been using force placed insurance coverage to fill coverage gaps for borrowers, it has become increasingly important as more insurance agencies deny coverage. This is becoming especially common in areas prone to natural disaster damage.
How Force Placed Insurance Benefits Property Owners and Lenders
Most home and property owners can often obtain cheaper insurance through an agency than the cost of force placed insurance through a lender. However, for property owners unable to get enough or any insurance coverage through an agency, force placed insurance can be an ideal solution for protecting the homeowner and the lender.
Force placed insurance coverage is not a one-size-fits-all solution. Lenders should consult an agency specializing in force placed insurance to determine the policy options available for this type of insurance.