1. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    Under the terms of your mortgage your lender can buy a homeowner’s policy to protect his interest.  He will do this if you do not provide one.  That cost of that policy is then included in your mortgage payments.  The policy may not protect your interests but it will protect the lender’s.  The policy may be more expensive.  Normally the lender will discontinue the policy when you buy one yourself, naming him as mortgagee.
    Answered on February 28, 2014
  2. 730 POINTS
    Darald Novak AAI
    Retired Agent and Broker, Self Employed, Albany NY USA
    In New York the named insured for a homeowners policy must occupy the premises. The mortgagee or lender does not qualify for a homeowners policy as it does not occupy the premises as a residence. When the borrower's 'hazard insurance' is terminated, the lender secures property coverage to protect their insurable interest only.  Typically, the borrower is not a named insured on these 'forced placed' policies purchased by the lender.  In this situation the borrower now has no insurance on the dwelling, their personal property, nor do they have any personal liability insurance.  In some states a lender may be able to purchase a homeowners policy and may be able to include the borrower as a named insured. I have never seen this in New York.  If you are the borrower and your lender has purchased the 'forced placed' coverage, ask for a copy of the policy to make sure you are afforded coverage under the policy.  The premium for this 'forced placed' policy will be added to your mortgage payments.
    Answered on March 4, 2014
  3. 1185 POINTS
    Scott W Johnson
    Manager, Marindependent Insurance Services LLC, California
    Your lender has the right under your mortgage contract to purchase and maintain Home Insurance if you do not do so yourself. Often this insurance is more expensive than you can find on the open market. If you do not have home insurance and you have a loan, you will want to purchase the insurance yourself.

    Also lender required flood insurance can be required for homes that are located in high risk flood zones.
    Answered on September 27, 2016
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