What Is Force-Placed Insurance on a Home?

Force-placed insurance is a policy your bank or lender purchases in the event of a homeowners insurance lapse or cancellation. These policies tend to cost more and provide less coverage than what you could find on your own.^[1]

States don’t have a legal requirement to buy homeowners insurance, unlike with auto insurance. But if you have a mortgage, your mortgage lender will require you to purchase home insurance to protect its investment in the property.^[2]

Here’s what you need to know about how force-placed insurance works differently than standard home insurance and what it covers.

Shop for Home Insurance

Insurify partners with 120+ insurers for real quotes

Excellent

4.7 out of 5 based on 17,576 reviews

Secure. Free. Easy-to-use.

How force-placed insurance works

When you take out a mortgage loan, your lending agreement states that you must maintain a certain level of coverage on the property. If your policy lapses, your insurer cancels your policy, or you have insufficient coverage, your mortgage servicer may buy force-placed insurance. Your loan documents should have the specific details.

Also known as creditor-placed or lender-placed insurance, this policy protects your lender’s investment in the home in case of an unexpected loss.^[3] It’s a type of hazard insurance coverage that your lender takes out on your behalf.

Before buying force-placed insurance, your lender will notify you that you either need to provide proof of insurance or purchase coverage. If you fail to provide proof of insurance, your lender will inform you they intend to purchase force-placed insurance. This notice will also include details about the potential coverage and premium cost.

Good to Know

If the lender buys force-placed insurance, you may pay for it as part of your monthly payments or escrow account.^[4] But if you provide proof of insurance, your lender must cancel the force-placed coverage and provide compensation for any premiums paid for duplicate coverage.^[5]

Is force-placed insurance legal?

Yes. Force-placed insurance is legal, but federal law limits how and when a lender can purchase force-placed insurance on your behalf. First, your lender must have reasonable proof that you’ve failed to maintain adequate homeowners insurance.

If you don’t have coverage in place, the lender must mail two notices requesting that the homeowner either purchase or provide proof of insurance. The lender must send the first written notice at least 45 days before purchasing a lender-placed insurance policy and the second notice at least 30 days later. The notice must include an estimate or the cost of purchasing a force-placed policy.^[5]

What force-placed insurance covers

Force-placed insurance covers the lender’s interest in the property, so this policy may not cover as much as a standard home insurance policy would. It usually provides dwelling coverage for the home’s structure if a fire or natural disaster damages or destroys it.

Creditor-placed insurance may also cover fewer perils than a standard homeowners insurance policy. If your home does need repairs or a complete replacement, it’ll likely cover the actual cash value, resulting in a lower payout.^[4]

What force-placed insurance doesn’t cover

Force-placed insurance has fairly limited coverage, and keeping it as your home insurance policy has some risks. Here’s what this insurance won’t cover:

Personal property
Force-placed insurance doesn’t usually pay to repair or replace your personal belongings, including furniture, clothing, and other items located inside the home.
Liability
A force-placed policy also doesn’t usually provide personal liability protection to the property owner. For example, if someone incurs an injury at your home and sues you, forced-placed insurance likely won’t cover your legal costs.
Cost of living expenses
Force-placed insurance doesn’t typically pay for loss of use coverage if you need additional living arrangements, like a hotel stay if your home is temporarily uninhabitable.
Home upgrades
If your home needs repairs, force-placed insurance likely won’t cover any upgrades or improvements you’ve made to the property.
Non-standard perils
Force-placed insurance may not cover perils like theft or vandalism.

Force-placed insurance cost

Insurify doesn’t have internal data on the exact cost of force-placed insurance, but it usually costs more than regular homeowners insurance. The average annual cost of a home insurance policy with $300,000 in dwelling coverage and a $1,000 deductible in the U.S. is $2,377.

Force-placed insurance tends to cost more than standard home insurance for a few reasons. Your lender’s main objective is to make sure the property has adequate coverage, but it doesn’t need to worry about helping you save money. For that reason, lenders have no incentive to negotiate with insurers, ask for discounts, or shop around for different policies.

Find Home Insurance

Get personalized home insurance quotes in minutes

Excellent

4.7 out of 5 based on 17,576 reviews

Secure. Free. Easy-to-use.

How to remove force-placed insurance

Force-placed insurance isn’t a great option for borrowers because of its high premiums and limited coverage.

Here are the steps you can take to remove force-placed insurance:

Reach out to your insurer. Before your lender will remove force-placed insurance, you must have an adequate homeowners policy in place. You can contact your current insurance company to reinstate your previous policy or purchase an entirely new policy.
Provide proof of insurance. Once your new policy is in effect, send a copy of any relevant documents to your lender. After you’ve shown the lender proof of insurance, you can send a letter requesting that they cancel the force-placed policy.
Follow up. After you’ve submitted the request and documents, follow up to ensure your lender receives all the information.
Verify removal. Verify that your servicer has removed the force-placed insurance and refunded you for any dual coverage. Make sure you keep adequate records in case you need to file a complaint.^[1]

Force-placed insurance FAQs

Here’s some additional information about force-placed insurance and how to avoid using it.

Can you remove force-placed insurance?

Yes. Once you purchase your own policy, notify your lender about the updated insurance information. Your lender must cancel the force-placed policy and refund any fees for periods of overlapping coverage.

How can you avoid force-placed insurance?

The best way to avoid force-placed insurance is to maintain your current home insurance coverage or purchase a new policy before policy lapse or cancellation. Your lender must notify you at least 45 days before proceeding with force-placed insurance. Once you receive that notice, you can either provide proof of insurance or start shopping around for a new policy.

Can you get a refund on force-placed insurance?

Yes. You can receive a refund if you already had active insurance and paid for duplicate coverage if you show proof of coverage. But if the force-placed insurance was due to a lapse in coverage, you’re unlikely to receive a reimbursement.

Can you choose your own force-placed insurance policy?

Force-placed insurance is coverage that the lender chooses to protect its financial interest in the home. You always have the right to choose your own insurance policy and avoid force-placed insurance.

Always keep an eye on your policy expiration date so you can renew your policy or find a new one and avoid a policy lapse. Reach out to your insurance agent if you have questions about policy renewal.

Sources

New York State Department of Financial Services. "Force-Placed Insurance: What You Need to Know."
Insurance Information Institute. "Can I own a home without homeowners insurance?."
National Association of Insurance Commissioners. "Lender-Placed Insurance."
Virginia State Corporation Commission. "Consumer Tips for Force-Placed Homeowners Insurance."
NOLO. "Federal Laws That Cover Force-Placed (Lender-Placed) Insurance."

Methodology

Insurify data scientists analyzed rates from more than 180 home insurance companies sourced directly from Insurify’s partner companies and Quadrant Information Services. Rates span all 50 states and Washington, D.C., and quote averages represent the mean price for a given coverage level and geographic area. To ensure data reliability, only insurers meeting minimum quote thresholds were included in the analysis.

Unless otherwise specified, quoted rates reflect the average cost for homeowners with no prior claims and good credit with a home construction year of 1980. The default coverage assumptions include:

Default Coverage Assumptions

Dwelling coverage: $300,000
Deductible: $1,000
Personal property limit: $25,000
Liability limit: $300,000

Additional data points beyond these default values are sourced from Insurify’s proprietary database. Rates are updated monthly.

Homeowners Insurance for First-Time Buyers

If you’re a first-time homebuyer with a mortgage or you want to protect your home and belongings from financial losses, you’ll need home insurance.

How to Buy Home Insurance: A Guide for Homeowners

To buy home insurance, figure out how much coverage you need, compare quotes from multiple insurers, and choose a policy that fits your home, budget, and lender requirements.

Cheapest Home Insurance Quotes

Shelter, American Family, and Cincinnati Insurance are the cheapest national home insurance companies.

Home Insurance Renewal: What To Expect in 2026

Your home insurance renews every year, and you’ll get a notice in the mail, usually 30 days before. It’s a great time to shop for better rates and ask about discounts.

Compare Home Insurance Quotes Side by Side

Comparing at least three home insurance quotes side by side is the fastest way to find the lowest rate for the coverage your home needs.

Condo Insurance Guide: Coverage, Cost, and How It Works

Condo insurance (HO-6) protects your unit, belongings, and liability where your condo association’s master policy leaves off.

Cheapest Home Insurance for Older Homes

Westfield, Grange, and Erie are among the cheapest home insurance companies for older homes.

5 Best Home Insurance Companies

State Farm and American Family are two of the best home insurance companies.

Writer: Jamie JohnsonInsurance and Personal Finance Writer

Qualifications:

6 years experience in personal finance writing
Featured on Credit Karma and Insider

Jamie is a meticulous researcher who has published 2,000+ personal finance articles. Her expertise is trusted by major brands like Bankrate and Rocket Mortgage.

Jamie Johnson's bio

Editor: Katie PowersLicensed P&C Agent, Senior Insurance Editor