Force-placed insurance
Insurance the lender buys on your behalf if you let your homeowners policy lapse. Usually much more expensive and covers only the lender's interest, not yours.
Every term like this one lights up in the step you're on.
Free to set up. No credit card.Part 1 of 4
Why a seller cares
If your homeowners policy lapsed, the lender may have bought expensive coverage for its own protection and added it to your loan. It shows up in the payoff, and it is worth catching before closing rather than at it.
Part 2 of 4
A simple example
Your policy lapsed for four months last year. The lender force-placed a policy at $2,400 for that stretch and added it to your escrow shortage.
| What happened | What it does at payoff |
|---|---|
| A lapse and a force-placed policy | The premium is in your balance or your escrow shortage |
| Proof of your own coverage sent late | Often a partial refund, if you ask |
| No lapse | Nothing to see |
Force-placed coverage protects the lender at your expense, and the expense is in the payoff.
Part 3 of 4
What people get wrong
That it covers you. It covers the lender's interest, and a claim for your belongings goes nowhere.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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