When you enter into a loan agreement, you must purchase the required insurance policies. If you fail to obtain adequate coverage, the loan provider can force-place a policy on your property to safeguard their financial investment.
This creditor-placed coverage typically has higher monthly payments, and even though the bank acquires it, you must pay the cost. Removing lender-placed insurance is a relatively simple process that is well worth the cost savings.
Make the Required Payments
Continue to make all loan and insurance payments on time. You need to pay the premiums for the force-placed policy until you obtain another one.
Research Your Options
Perhaps your coverage lapsed because of a missed payment, or maybe the monthly premium is too high for your budget. Spend some time researching other available options to find the best choice for you. You may be able to save money, ensuring you don’t lose protection again in the future.
Purchase New Coverage
Once you have gathered quotes and found a protection that fits your budget and the bank’s requirements, buy the new policy or reinstate your previous insurance.
Provide Documentation to the Bank
The last step in removing lender-placed insurance is to send the bank paperwork that proves you have the necessary indemnity in place. The lender will not cancel the force-placed protection until they have received all documentation.
Creditor-placed policies protect lenders, not you. These programs offer minimal safeguards at a higher cost. If a bank has acquired insurance for you, it is wise to remove it as soon as possible to save you money.