With so many homes underwater as the housing crisis lingers on, many homeowners find themselves paying quite a bit more for insurance than they would expect. If a homeowner has a mortgage on their house and does not carry the minimum requires insurance, the lender will place insurance on that house to cover their investment. It's called force-placed insurance, according to Mark Terry, with the Illinois Department of Insurance.
He says the lender will pick out the policy, you are going to pay for it, and it will only cover the lender's interest in the property. Terry says this has been the topic of several inquiries at their office recently. If you have questions, call 1-866-445-5364.