How to avoid force-placed insurance from a lender
Because auto insurance is mandatory in almost every state and virtually all mortgages require insurance as part of the loan conditions, your creditor has a legal right to purchase insurance for you and then bill you for it. But avoiding force-placed insurance is easy. Simply make sure you are carrying at least the minimum legal and lender requirements on your home or auto policy. You’ll be better off purchasing the policy you want at the price you want, rather than leaving it up to your lender.
At Progressive, we’re very knowledgeable about lienholder requirements and any policy you buy from us will always satisfy your state’s insurance laws.
You’ll be better off purchasing the policy you want at the price you want, rather than leaving it up to your lender.
Current Progressive customers
Log in to your policy or call us anytime at 1-866-749-7436 to check on your coverages.
New Progressive customers
What does force-placed insurance cover?
A forced policy functions like any other insurance policy, covering you for at least the state minimums on auto, plus whatever the lender deems necessary. However, the policy may be missing coverages that protect you, like personal property, or may lack the right amount of liability coverage. Remember, your creditor is only interested in protecting their investment—the home or motor vehicle. If you stay with the policy that your lender forced, it’s important to make sure you are adequately protected in all areas with the proper limits.
Possible limitations on a force-placed policy
Force-placed auto insurance
On a forced auto policy, you may not have enough coverage if you were to injure someone else or damage their property. For instance, if your forced policy covers you for $50,000 in bodily injury liability and you cause $100,000 in injuries, you may have to pay the difference out of your own pocket.
Force-placed home insurance
You may not be covered for clothing, furniture, and household valuables on a forced home policy, as your lender is concerned with the home’s structure and not your belongings. For example, if you have $150,000 in personal property and your forced policy only covers $75.000, you’d only recoup half the value of your contents if you were to lose everything in a fire.
How to remove force-placed insurance
A force-placed policy can be cancelled at any time by contacting the insurer. You’ll obviously need to purchase insurance on your own, and make certain there is no interruption between policies. There could be a cancellation fee, depending on the company.