Lenders & Contracts · Insurance Term
Force-Placed Insurance (Lender-Placed Insurance)
Definition
Force-placed insurance, also called lender-placed insurance, is coverage your lender buys and charges to you when your required insurance lapses, is canceled or doesn't meet the loan terms. It mainly protects the lender's interest and is often costlier and narrower than a policy you would choose yourself.
In Plain English
Loan documents set lender insurance requirements for property, flood, wind and liability coverage. If the lender doesn't receive proof of coverage, or gets a notice of cancellation, it may send warning letters and then buy coverage itself. The cost is usually added to your loan balance or escrow.
Force-placed policies typically protect the lender's collateral, not your equity, contents, lost income or liability. They may also be backdated to cover a gap.
The simplest prevention is keeping the lender correctly listed under the mortgagee clause and sending proof of renewal before expiration, often on an ACORD 28 evidence of property insurance. If force-placed coverage appears, replace it with your own policy and ask the lender to cancel theirs and credit any unearned charges.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical and simplified: An owner's flood policy lapses after a missed payment, and the lender buys a force-placed flood policy charged to the owner's escrow. The owner then buys a new policy and sends proof. The lender cancels the force-placed policy and may credit back the unused premium.
What to Watch For
- Send renewal proof to your lender before every expiration date.
- Check that your lender's name, loan number and address are correct on each policy.
- Read lender letters about insurance as soon as they arrive.
- If coverage is force-placed, ask what it covers and how to have it removed.
Last updated October 14, 2026 · Primesure editorial team · How We Write