How To Avoid Force Placed Homeowners Insurance

Wednesday, 26 October 2016

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Most people decide to purchase a manufactured home with the help of a manufactured home loan, which is subject to certain terms and conditions, also referred to as covenants. One common covenant requires borrowers to carry a certain level of homeowners insurance for the life of the loan. If a borrower fails to purchase the proper amount of coverage or to renew his policy on time, the lender is permitted to force-place homeowners insurance on the property and charge the borrower for it, NAIC explains.

Since the lender gets to choose the insurance company and controls the policy along with the terms of the coverage, force placed homeowners insurance typically protects only the lender’s interest, up to the amount of the manufactured home loan. This means that, although you pay for homeowners insurance, it doesn’t cover your equity in the home, personal property and liability.


Avoiding Force Placed Homeowners Insurance

The Office of the Insurance Commissioner suggests that the easiest way to avoid force placed homeowners insurance is by purchasing comprehensive manufactured home insurance on your own and providing proof of coverage with the lender shown as a lien holder. But according to our manufactured home insurance experts, the best way to avoid this type of insurance is to be diligent about your insurance policy in every aspect. Here are a few things you should keep in mind.

  • Read your manufactured home loan agreement carefully and make sure that your homeowners insurance policy meets the terms and conditions specified.
  • Always pay your homeowners insurance premiums on-time.
  • Be on the lookout for notices from your manufactured home lender and insurer. If you receive any notices indicating new insurance requirements, purchase the required insurance plans immediately. As an example, a manufactured home might not require flood insurance when someone buys it. However, flood zone designations can change over time and the lender may require this type of insurance later on.
  • Check your mortgage statement for unexpected transactions. If you observe any additional charges, contact your lender immediately and ask him if you’re missing some sort of insurance.
  • In case that your insurance policy has lapsed, you can take action during or immediately after the grace period. There is usually a 30-day grace period during which you still have coverage and can renew your policy. If the grace period has ended, you can reinstate your policy before your lender purchases force placed homeowners insurance. According to the Mortgage Servicing Rules under the Real Estate Settlement Procedures Act, your lender must notify you at least 45 days before he purchases force placed insurance.
  • Buy a manufactured home insurance policy and provide proof of coverage as soon as possible, even if your lender has already force-placed insurance on your property. Under the provisions of the aforementioned Act, lenders need to cancel force placed homeowners insurance and refund duplicate coverage costs if the borrower provides evidence that he has adequate insurance coverage in place.  

Another important point to consider is that your lender might also become concerned about your financial stability when you fail to keep your homeowners insurance current. They might even think that you present a potential foreclosure risk.


Providing specialized financing options and comprehensive insurance programs in 42 states since 1959, Triad Financial Services has a proven track record of success. When it comes to financing and insuring manufactured homes, our company is recognized as a leading one-stop shop able to meet the needs of all types of manufactured home buyers and investors. To learn more about our manufactured home lending and insurance solutions, please call our experienced professionals today at (800)-522-2013.

Tagged under: Home Owner Information, Insurance Information

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