Many homeowners never even hear of force placed insurance before they get a notice from their mortgage provider telling them about it. If they do not act fast, the bank will take it over from them, at a cost that’s usually often much more than you’d pay in the open market. What’s worse is that some of those homeowners have been paying too much for force placed insurance and are now unable to pay it off. What should homeowners do now?
First of all, it’s important that you understand what force placed policies and mortgages actually are. Most lenders offer these policies to help homeowners save money by protecting their homes. However, there are many differences between the policies and mortgages so you’ll want to make sure you fully understand the terms before signing anything.
Home insurance typically provides two to three days’ cover for repairs or replacement of personal property damaged or destroyed by a storm, lightning, hail, earthquake, flooding, fire or vandalism. This covers both you and your belongings. It may also pay for damage to the home itself due to vandalism, arson or an accident. In a force placed policy, however, the coverage doesn’t stop there. A plaintiff will have to sue the insurance company and collect damages for the amount of the insured amount, up to the amount of the original mortgage loan.
This is where the problem lies because the policy usually ends up costing the homeowner more than if they had purchased it in the first place, especially if the insurance company does not offer a lower premium. When you don’t have a chance to save money on your mortgage, you lose the right to file a lawsuit because the insurance company can “shop around” to find the best deal. The bank is the one who’s buying the policy and they usually have an advantage because they can negotiate better rates.
If you decide to pursue this lawsuit after the policy has been in place for only a few months, you will need to hire a lawyer from the mortgage company’s insurance division. They will handle the legal process and represent you in court. It’s essential that you hire the best lawyer in your area, so you don’t end up paying for a lawyer who specializes in this type of litigation only for the first year of your policy. Even though a force placed policy typically has no time limit, you still have to pay the attorney fees for every day you wait until after the policy has ended.
A force placed lawsuit is a great way to protect your home and save money on your mortgage if you’re facing an unexpected expense like a broken down car, a major medical emergency or the cost of repairs to a home that you think might need immediate repair. It’s also a good way to protect your belongings during a financial crisis if you have some items that are beyond repair.
In order to protect your assets, you must file the suit as soon as possible, so that you’re able to file your claim with the force placed insurance company. Most people are surprised at how long it takes to obtain the legal papers needed to file this type of lawsuit, but it’s completely worth it because a lawsuit can make or break your claim.
If you do decide to go this route, it’s best to have someone familiar with the process represent you because your mortgage company will fight your case on your behalf. If you’re represented by an inexperienced lawyer, they may be too busy to do so properly. A lawyer who specializes in force placed cases can make sure that you win the case in a timely manner.