Force-placed insurance, also called lender-placed, creditor-placed or collateral protection insurance is an insurance policy lenders force the borrower to pay for to protect their property or vehicle in the event the person financing drops their insurance coverage or fails to provide proof of insurance.
We’ll take a look at some reasons why a lender may put force-placed insurance on your property and what you can do moving forward.
How Force-Placed Insurance Works
When you purchase a home or car, your lender will require you to have insurance to protect their investment. These terms are generally in the contract you sign. If you fail to provide proof of insurance after establishing a loan or drop your coverage, your lender may provide force-placed insurance on the home or car, which you’ll have to pay for.
What To Do When You Have Force-Placed Insurance
If force-placed insurance was purchased on your behalf because your insurance lapsed or you failed to provide proof of insurance to your lender, you have a few options:
- Purchase a new insurance policy
- Get your old policy reinstated
- Send copies of the relevant documents to your lender and request they cancel the force-placed insurance on your policy
Whether you think force-placed insurance was a mistake or you did in fact not have insurance, it’s important to keep paying your lender on time.
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Are You Looking for a Reputable Lender?
Force-placed insurance is aimed at protecting the lender and their investment. To avoid it, make sure you have the insurance required by your contract and make your payments on time.
If you’re looking for a reputable and personalized lender, it may be time to contact People’s Community Federal Credit Union. We offer auto loans and home loans, and all members get the same low rate. Visit our website or contact us to see the great deals you can get.Back to Auto Loans
What is Forced-Placed Insurance? in Vancouver WA
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