All about force-placed insurance letters 

In this article: 

• What is force-placed insurance? 
• Why lenders send force-placed insurance letters 
• What force-placed insurance covers 
• What to do if you receive a forced-place insurance letter 

Homeowners insurance is a required part of maintaining a mortgage. It protects your home, your belongings and the lender’s investment in the property. When a lender does not have active proof of insurance on file, it may issue a force-placed insurance notice. Receiving this letter can be surprising or confusing, but it is a common situation and can usually be corrected quickly. 

This guide explains what force-placed insurance is, why these letters are sent and what steps you should take if you receive one. 

What is force-placed insurance? 

Force-placed insurance is an insurance policy purchased by the lender when a homeowner’s insurance has lapsed, been canceled or has not been verified. The lender must ensure the home is insured, since it protects the property used as collateral for the mortgage. 

Force-placed insurance is often more expensive than traditional homeowners insurance and provides limited coverage. Because of this, it is in your best interest to resolve the issue quickly if you receive a force-placed notice. 

Why lenders send force-placed insurance letters 

Lenders send these letters when: 

• Your homeowners insurance policy has been canceled.
• The lender did not receive a renewal declaration from your insurer.
• You changed insurance companies and the new policy was not sent to the lender. 
• Your insurance company sent a cancellation notice due to nonpayment.
• Your policy expired without evidence of renewal.
• The policy does not meet minimum coverage requirements.

Often, the cause is a simple documentation issue rather than a true lapse in coverage. 

What force-placed insurance does and does not cover 

Force-placed coverage is designed primarily to protect the structure of the home. It does not include many of the protections offered by a traditional homeowners policy.  

Force-placed insurance generally covers: 

• The physical structure of the home
• Losses that would risk the lender’s collateral

Force-placed insurance usually does not cover: 

• Personal belongings
• Liability protection
• Additional living expenses 
• Optional coverage such as detached buildings or water damage protection

This lack of coverage is why it is important to maintain a standard homeowners insurance policy. 

Common reasons members receive force-placed letters 

Several common and easily resolved situations can trigger a force-placed notice. 

You switched insurance companies 

Many homeowners change insurers to save money or improve coverage. If the new insurer did not notify Desert Financial, the system may show the old policy as canceled with no replacement on file. 

Solution: Provide the new declarations page to Mortgage Servicing. 

Your policy renewed but the lender was not notified 

Insurance companies typically send renewal information automatically, but sometimes the documents are delayed or not sent. This leads the lender to believe the policy has expired. 

Solution: Ask your insurance provider to resend the renewal documents. 

Your policy was canceled for nonpayment 

If your premium is not paid on time, the insurance company may cancel your policy. This can happen by mistake if your payment method changed or if escrow did not receive the correct bill. 

Solution: Contact your insurer immediately to reinstate coverage or obtain a new policy. 

Your coverage amount changed 

If coverage amounts fall below the minimum required by your mortgage, the lender may request updated documentation or issue a force-placed warning. 

Solution: Review your policy limits and make updates if needed. 

What to do if you receive a force-placed insurance letter 

Receiving a force-placed letter does not mean you are uninsured or in trouble. It simply means the lender needs confirmation of valid coverage. Here are the steps you should take: 

Step 1: Review your current insurance policy. Confirm that your policy is active by checking your declarations page or contacting your insurance agent. 

Step 2: Contact your insurance provider. Ask your insurer to send updated proof of insurance directly to Desert Financial. Most providers can send this electronically within minutes. Information they will need includes: 

• Your loan number
• Your property address
• Desert Financial’s mortgage insurance department contact information 

Step 3: Call Desert Financial to confirm receipt. After your insurer sends the documents, contact Desert Financial Mortgage Servicing to ensure the policy has been updated in the system. This helps prevent force-placed coverage from taking effect. 

Step 4: Follow up if you recently switched insurance. If you changed insurers, remember that your previous provider may issue a refund. This refund should be deposited back into your escrow account to keep your balance accurate. 

How force-placed insurance affects your mortgage payment 

If force-placed insurance is added to your loan, it may significantly increase your monthly payment because this type of policy is more expensive than standard homeowners insurance. 

Your escrow account may also become short because force-placed premiums are typically higher. This can lead to an escrow shortage, which can further impact your payment until the correction is made. 

Resolving the issue quickly prevents unnecessary increases or adjustments. 

How to avoid force-placed insurance notices in the future 

There are several ways to prevent these letters from occurring: 

• Notify Desert Financial whenever you switch insurance providers.
• Ensure your insurer has the correct lender contact information. 
• Submit renewal declarations promptly each year. 
• Verify that your escrow account is paying premiums on time.
• Maintain coverage amounts that meet minimum requirements. 

When to contact Desert Financial 

We’re always here to support you with clear answers and member-first service. Contact Mortgage Servicing at (602) 433-7097 or firstmortgageservicing@desertfinancial.com if: 

• You receive a force-placed insurance letter.
• You recently switched insurance companies.
• Your policy was canceled or not renewed.
• You need help verifying whether coverage is active.
• Your mortgage payment increased unexpectedly due to insurance changes.