Force placed Insurance. 

If you have a loan on your home, your Mortgage Company can purchase a force placed homeowners insurance policy to protect their interest if your homeowners insurance policy cancels or non-renews. 

Great?

No.

The “force placed” homeowners insurance policy your mortgage company will purchase will usually be more expensive than any homeowners policy that is available in the open market.

The amount will be passed onto you until you replace it with an active home insurance policy.

force placed homeowners insurance

 

What the policy doesn’t cover.

The policy will only cover the structure of the house up to the loan amount.

So what?

example)

You purchased a $200,000 house.

You owe $125,000.

Your homeowners insurance policy cancels and your mortgage company buys a force placed insurance policy for $125,000.

There is a claim and your house burns down.

The force placed insurance policy will pay off the balance of your loan to your mortgage company.

You will not get paid for your personal property or receive any money to live at another property while your house is rebuilt.

Basically you are out on the street. 

 

A Force Placed Home Insurance policy will only cover the structure of the house up to the loan value.

The policy provides

NO contents coverage

NO liability coverage

NO loss of use in the event of a claim

 

Most homeowners insurance companies will not consider force placed insurance as prior insurance.

Your new quote will be either unacceptable or surcharged an additional premium

 

What about Force Placed Flood Insurance?

I received a letter from Bank of America telling me they were going to force place Flood Insurance on my house.

Now I have a Flood policy and Bank of America is listed on the policy.

The cost of Bank of America’s Flood policy?

$9,213.75

The cost of my own Flood policy?

$410

If your homeowners insurance is not force placed but it is in escrow and your mortgage company pays the premium every year, you may be ready to make a move to another insurance company but the policy term has not expired.

Can I move my homeowners insurance from my mortgage company before the policy expiration date?

Yes.

When you bought your house, the homeowners insurance was part of your mortgage payment.

When a Mortgage Company decides to provide a loan to you for your new home purchase, they need to protect their investment so they require you to purchase a home insurance policy.  

Often a real estate agent or mortgage broker has a connection or referral source and will push you to their insurance agent to provide a quote for you.

In many cases,  this is not the most competitive quote in the market but all you want to do is close on your new house so you may not have time to make the calls yourself for home insurance.

Although the homeowners insurance policy is an annual 12 month term policy, you can cancel your policy during the policy term and you will receive a pro rated refund.

 

Can you move your homeowners insurance if your mortgage company already paid the premium?

Yes.  

If your replace your current homeowners insurance policy with a new homeowners insurance policy, you will receive a full refund if the effective date of your new policy is the same date as the expiration date of your current policy.

Your current insurance company will issue a refund back to you and you can send your refund back to your mortgage company to put into escrow.

 

 

We Make it Easy

At FM Agency Group we make the transition from your existing homeowners insurance company to a new one an easy process.

We work with you every step of the way during the process.

And we not only sell homeowners insurance.

We service it too.

 

 

WE MAKE IT EASY TO CONTACT US

Call us at 504.348.3131

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