8 min read
Jan 15, 2025
Why Force Placed Insurance Is Often Expensive
Many homeowners are shocked by the premium on a force placed insurance notice. It is common to see prices that are double or triple a standard policy.
Limited Shopping
Lenders do not shop around for the best rate like you do. They have agreements with specific insurers to provide coverage automatically. This convenience comes at a premium.
Higher Risk Pool
Homes that require force placed insurance are often viewed as "high risk" because they may have had lapses in coverage, older roofs, or maintenance issues. The pricing reflects this increased risk.
Program Administration
The cost often includes the administrative burden of tracking insurance for millions of loans, sending notices, and managing the placement of policies.
How to Lower the Cost
The only effective way to lower the cost is to replace the policy with your own voluntary homeowners insurance. Once you provide proof of coverage, the lender must cancel the forced policy and refund the unearned premium.
Frequently Asked Questions
Will my mortgage payment go down if I replace it?
Usually, yes. Since standard insurance is cheaper, your escrow payment requirements will likely decrease.
Related Posts
How to remove force placed homeowner insurance
A Simple Exit Plan That Often Works
Once you understand how you arrived at force placed coverage, the next goal is usually to replace it and restore full protection.
01
Secure New Coverage
Shop for a policy that fits your specific situation, whether through standard insurers or high-risk "excess and surplus" markets.
Ensure your new coverage restores the personal property and liability protection that force-placed policies often omit, and verify that dwelling limits are based on replacement cost rather than just your loan balance.
02
Submit Proof
To cancel the lender’s policy, you must provide a complete proof of insurance package.
This typically includes a full declarations page and the servicer's specific mortgagee clause—including your loan number—to prove your coverage meets the minimum requirements of your mortgage contract.
03
Confirm Cancellation
Once your servicer accepts the proof, they will typically cancel the force-placed policy and issue a pro-rated refund to your escrow account.
Monitor your account to ensure the refund is applied and that your monthly mortgage payment is recalculated to reflect the lower insurance costs.