Some smaller banks are able to place the property insurance through a local agent.
Also, coverage for foreclosed properties can usually be added to most policies at a different (more costly) premium rate. Insurers then bill an additional premium to the bank.īe aware of the perils that are insured, and the penalties for missed reports. The deposit is used up as the reports of property covered accumulate. The insurance company charges a minimum deposit premium ($500 for a small- to medium-sized bank is not unusual), and reports of the property to be covered are made each month to the insurance company. Most forced-placed policies are on a reporting form. Banks can (in most states) charge the premium back to the customer’s account, though proposed regulation is threatening this practice. The amount of coverage is usually the amount of the outstanding loan. Forced-placed policies are one way to insure a customer’s property when the customer fails to obtain insurance. Most bank mortgage errors and omissions policies allow ninety days to place alternate coverage from the time it is discovered that an insurance policy has lapsed.
Once it has been discovered that a mortgaged property is not insured by the mortgagee, coverage must be “placed” in force by the bank.
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