I have posted numerous times on this but I can’t get enough of it and apparently no one listens to me. Forced placed policies are policies purchased by your mortgage company when you fail to buy a policy on your own. Forced placed policies often go hand in hand with homeowners that are in foreclosure or having trouble paying their mortgage. When the bank buys the policy several bad things happen for the homeowner. 1) The bank is only going to buy enough coverage to cover the mortgage. Typically policies will be enough to cover the cost of rebuilding the home should it be demolished to the ground. The mortgage amount rarely matches up with what it costs to rebuild the house. 2) Because the bank is only worried about covering its own money it usually means it cares very little about the policy coverages. Usually what the policy covers as far as causes of damage are limited and any coverages for your personal belongings inside the home will be minimal to none at all. The bank doesn’t care about your stuff. 3) The policy will be taken in the banks name, meaning you the homeowner play second fiddle and the bank gets to run the show and collect all the money first should you have an insurance claim. 4) If you are listed secondarily as a borrower on the forced placed policy you may not even have legal rights to recover attorney fees if you have to sue to recover insurance benefits. This is because the law protects insureds and reimburses insureds for their legal fees if they have to sue, and win, their insurance company. When you are a borrower and not an insured, many courts have taken the position that your lawyer doesn’t get paid. This makes it harder to find a lawyer who may potentially work for free and also makes it harder to settle your case because the insurance company has less risk in going to trial. Please, if you can, get away from a forced placed policy asap.
February 20, 2017 by Morgan Barfield