The cost of force-placed insurance, also known as lender-placed or creditor-placed insurance, varies widely and can be significantly higher than a typical homeowner’s insurance policy. On average, it can range from two to ten times the cost of a standard insurance policy. The exact amount depends on several factors, including the property’s value, location, and the specific coverage terms established by the lender.
Lenders purchase this insurance to protect their financial interest when property owners fail to maintain their own coverage, and typically, the cost is passed on to the borrower. This insurance usually covers only the structure of the property, excluding personal belongings and often offers limited coverage compared to standard policies. Due to the high cost and limited protection, it is advisable for property owners to maintain their own comprehensive insurance policy to avoid incurring this added expense.
