A forced place policy means that in a case of a loss, the mortgage company uses the minimum coverage insurance that you pay for when you make a mortgage payment to protect their asset (your home).
This minimum coverage usually only covers the mitigation and reconstruction of the home. Rarely your contents and paid temporary housing.
A forced placed policy will need to be used in a few different situations. Two common examples are: missed payments of homeowners’ insurance or you just purchased a home and haven\’t picked an insurance provider yet.
This situation is never easy for any homeowner. Not having proper coverage can make things more difficult and make the process a lot longer than usual. You are having to pay your mortgage payments while you’re not living in your home and you have no support from the insurance company to pay for your temporary living situation. It can be extremely stressful!
Homeowners in this situation need to be as proactive as well as the contractor and the adjuster to get things moving forward quickly. This takes everyone\’s efforts. Getting permits pulled. Inspections scheduled. Payments sent out. All of the above need to happen to get you back home as soon as possible.
Common roadblocks for a forced placed policy.
-Lack of communication from the adjuster
-Contractors not providing the proper paperwork to the mortgage company promptly
-Homeowner\’s financial situation due to no support for the cost of living by the insurance company
-The mortgage company holding onto funds for the contractor to start the work
-Lack of coverages
The best-case scenario is having experienced contractors that have the full support of the adjuster and the homeowner to move things forward promptly to get everyone back home.