Force-Placed Insurance: What You Need to Know

Force-placed insurance, also known as creditor-placed, lender-placed or collateral protection insurance is an insurance policy placed by a lender, bank or loan servicer on a home when the property owners' own insurance is cancelled, has lapsed or is deemed insufficient and the borrower does not secure a replacement policy. This insurance allow the lender to protect its financial interest in the property.

A lender may also force-place flood insurance on homes in flood zones that they believe do not have enough flood insurance to meet the legal minimum required to protect the property.

If you obtain a loan to buy a car, you must have insurance to cover the car. If you fail to obtain insurance or let your insurance lapse, the lender likely has the right under the sales contract to force-place insurance on the car.

Force-placed insurance is usually a lot more expensive than what you can obtain by shopping for an insurance policy yourself. In addition, the lender-placed insurance policy may have limited coverage. For example, these policies generally do not cover personal items or owner liability.

What To Do If Your Lender Has Force-Placed Insurance on Your Property

As soon as possible, contact an insurance carrier and get a new policy or seek to have your old policy reinstated. Even if you believe the loan servicer is at fault, you should continue to make payments to cover the force-placed insurance.

Gather detailed proof of the new insurance and send a copy of the relevant documents to your servicer. Request that they cancel the force-placed insurance policy they obtained for you as soon as possible.

If a dispute arises, you can send a Qualified Written Request (QWR). A QWR is written correspondence that you or someone acting on your behalf can send to your servicer to ask for information relating to the servicing of your loan or to dispute errors about your loan account.

If the cancellation is due to your servicer's failure to make timely disbursements out of an escrow account for the homeowners' insurance premium payments, you may want to consult an attorney.

Get Help! Contact a Not-for-Profit Housing Counselor

Housing counselors can give you advice on your options and resources at little or no cost. They may also be able to negotiate with your lender for free and help you find free legal services in your area.

Housing counseling resources for New Yorkers include:

  • New York’s Homeowner Protection Program (HOPP), which connects with housing counselors and legal services at no cost. Call the HOPP hotline at (855) 466-3456 or visit
  • You can find a list of approved non-profit housing counselors by county here, on the DFS website.
  • 24-Hour assistance is available toll-free on the HOPE NOW hotline at 888-995-HOPE (888-995-4673). HOPE NOW is an alliance of HUD approved counseling agents, servicers, and investors that provide free assistance.
  • If you live in New York City, you can also call 311.

If you are in a foreclosure court case, you should consult an attorney. 

Seek Legal Assistance

Contact a lawyer and review your documents. If you do not have an attorney, the New York State Bar Association may be able to refer you to an appropriate attorney for your situation.

If you cannot afford a private attorney, resources for free or low-cost legal assistance include:

If you are in a foreclosure court case, you should consult an attorney.

File A Complaint

Learn how how to file a complaint with DFS.