1. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    The Mortgage Company or lender have certain rights if you fail to do what you have promised to do in your contract (mortgage or loan agreement.)  Placing coverage is a right retained by most lenders.  When you apply for a mortgage or loan you promise to insure the home or car and name the mortgagee or lender as a loss payee or additional insured.  If you don’t do that, they haven’t any coverage on their collateral and so they will issue a policy.  These are frequently short term policies because they are so expensive.  This is not a subject you want to find out about through experience.
    Answered on May 13, 2014
  2. 1185 POINTS
    Scott W Johnson
    Manager, Marindependent Insurance Services LLC, California
    The true owner of a home is the mortgage holder. Within your mortgage contract contains a clause which requires you to keep and maintain homeowners and in some cases flood insurance. If you fail to maintain this home insurance than the bank has the right to purchase the insurance themselves.

    Typically forced placed home and flood insurance is overpriced and not a good deal. Do you not allow this to happen to you. Everyone with a mortgage (and I would argue almost everyone period) needs to have home insurance.

    If you live a high risk flood zone (typically A and V) than you will need to keep flood insurance in place.
    Answered on November 1, 2016
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