Has your lender notified you that they will be force-placing insurance coverage on your upcoming mortgage loan? Whichever lender placed insurance companies your lender may be using, it’s important to understand the purpose and the benefits of having this type of insurance coverage in place.
It Ensures That You’re Maintaining Adequate Property Coverage
One of the primary purposes of lender-placed insurance is that it ensures an adequate level of property coverage is in place. Your lender may go this route if you have inadequate coverage due to:
- Policy cancellation
- Accidental policy expiration
- Inability to secure another policy
It Provides the Lender With Extra Security and May Offer Several Types of Coverage
Having lender-placed insurance gives your lender additional security, since you now have a safety net to mitigate potential risks that may impact your property. Some lender-placed policies may include coverage for some or all of the following.
- Hazard tracking
- Coverage for replacement costs
- Personal property coverage
- Flood or earthquake insurance
- Mortgage insurance
Whatever lender placed insurance companies your mortgage lender may be working with, the core purposes and benefits of having this insurance type are similar. By having lender-placed insurance, your lender gets additional peace of mind and you’re guaranteed to have the minimum adequate property coverage in place at all times.