Forced place insurance is an insurance policy taken out by a lender on the borrowers behalf when there is no current insurance on a property. While the lender will notify you with a time period to secure insurance on your own, they will not hesitate to act as soon as that time period expires.
Whether the borrower knowingly or unknowingly doesn’t have insurance, the lender has the right to force this coverage onto the property as per the documents that the borrower(s) signed at closing.
The charges for this insurance are always passed on to the borrower. Because borrowers who do not carry the necessary insurance coverage on assets represent high risks, premiums for forced place coverage are typically much higher than standard insurance premiums, and in most cases… astronomically high!
One of the most utilized force-place insurance actions in the state of Florida is for Flood Insurance. In Florida, it is not uncommon to be unaware of your requirements regarding flood zones and mandatory needs for flood insurance for zones A and E. This can be especially true at condo associations, where communication sometimes isn’t perfect. At our office, we remember zones A and E by associating them with the words Always and Expensive!! So if you are in zone A or E, be sure to have a flood insurance policy in place, or else your lender will do it for you at a rate you will not be happy about.
The Law Office of Donna Hearne-Gousse handles real estate transactions in the West Palm Beach area and the Fort Lauderdale area. As a real estate attorney in Royal Palm Beach, we actively represent buyers and sellers for title services and closings.
For more information on force place insurance or any other real estate need, feel free to contact us for a direct consultation.
The Law Office of Donna Hearne-Gousse