Force-Placed Flood Insurance: What It Is, How It Works, and How to Avoid It
If you’ve recently received a notice from your mortgage company saying they’ve purchased flood insurance for your property, you may have just been force-placed. This often happens when your current flood insurance policy lapses or no longer meets lender requirements. At Flood Insurance Guru, we’ve handled over 7,000 cases like this and want to help you avoid paying more for less coverage.
What Is Force-Placed Flood Insurance?
Force-placed flood insurance, also known as lender-placed insurance, is coverage that your lender buys and charges you for if you don’t maintain your own policy. This often happens when your insurance expires, gets canceled, or when your coverage amount falls below required loan thresholds.
Why Is It So Expensive?
Unlike traditional policies, force-placed flood insurance is often 3 to 5 times more expensive. It typically covers only the lender's interest in the property — meaning no contents, loss-of-use, or additional protections for you.
How to Avoid It
- Review your flood insurance policy 60 days before renewal.
- Send updated declarations to your lender and confirm receipt.
- Shop for private flood insurance, which is often more affordable than NFIP.
Learn more about private flood insurance options here.
What to Do If You’ve Been Force-Placed
Act quickly by contacting your flood insurance agent. Get proof of coverage and send it directly to your lender. Request written confirmation and ask about refund eligibility.
FAQs
Can I cancel force-placed flood insurance?
Yes, by submitting proof of valid insurance to your lender. You may qualify for a full or partial refund.
Is force-placed flood insurance always more expensive?
Yes. It can cost several thousand dollars more per year compared to policies from the NFIP or private insurers.
What does it cover?
Only the structure, and only up to the loan balance. It does not cover personal belongings or additional living expenses.
Can I switch to private flood insurance?
Yes. Most lenders will accept a private flood policy as long as it meets required standards.
Still have questions? Contact Flood Insurance Guru today at flood@floodinsuranceguru.com or call (205) 451-4294. We’re here to help you avoid unnecessary costs and ensure your property is properly protected.
Topics:
