What I Learned Filing a Claim Through Lender-Placed Insurance

I recently went through a claim on a property that had lender-placed insurance, sometimes called force-placed insurance.

Going into it, I really did not know what to expect.

I assumed it would probably be harder than dealing with a normal insurance company because technically the lender was the insured, not me.

What surprised me was that the actual claim and payout ended up going better than I expected.

The difficult part was everything around it.

Getting information.

Getting people on the phone.

Finding out who actually had authority to talk to us.

And probably the biggest challenge of all, trying to get the full policy jacket.

The First Thing I Learned: Get the Full Policy Jacket

This was probably the biggest lesson from the entire process.

At first, what I received was basically evidence of insurance. It showed that the property was insured, but it did not really tell me everything I needed to know about the coverage, exclusions, deductible, conditions, or how the claim would actually be handled.

My adjuster told me very early on:

The real policy jacket should be around 40 to 60 pages.

That was when I realized there was a big difference between having proof of insurance and actually having the full policy.

At one point, we were also provided with a master policy, but that still did not completely solve the problem.

If I were doing this again, one of my first questions would be:

Who has the full policy jacket for this specific property, and how do I get a copy?

Do not assume the first insurance document they send you is the actual policy.

The Mortgage Servicer May Be More Important Than the Insurance Company

This was another thing I did not fully understand at the beginning.

Because the policy was lender placed, my company was not technically the named insured.

The lender was.

In my case, the insurance side basically told us that claim information, decisions, documents, and payouts were going back to the mortgage servicer.

That meant a lot of the time we had to deal directly with the servicer to get updates.

That can make the process frustrating because you may feel like you are the property owner, you are the one dealing with the damage, but you are still not necessarily the party the insurance company considers its insured.

That distinction matters.

Getting Someone on the Phone Was One of the Hardest Parts

The communication side was probably worse than the actual claim.

There were a lot of calls.

A lot of transfers.

Different departments.

Different answers.

Even my adjuster had trouble getting through and getting authorization to speak with people.

At one point, the servicer wanted to contact me directly just so I could authorize my adjuster to speak with them.

We were also told that because it was a lender-placed policy, some updates could come through the servicer by mail and could take up to 45 days.

That was frustrating because the carrier already had documents, estimates, inspections, and the information they needed.

But we still could not always get a straight answer about where the claim stood.

Keep the Inspector’s Contact Information

This is something I would absolutely do again.

When the insurance inspector or field adjuster comes to the property, get their name, phone number, email, business card, whatever you can.

Keep it.

In my situation, that person became one of the few real connections I had into the insurance side of the process.

Since I was not technically the named insured, getting information through the normal channels was difficult.

Having the contact information for someone who had physically inspected the property and was connected to the claim was very helpful.

A Good Claims Adjuster Made a Huge Difference

I was fortunate to have a very good adjuster helping me.

That changed the experience completely.

There were a lot of documents involved.

Photos.

Inspections.

Police reports in my situation.

Estimates.

Lease information.

Questions about the condition of the property.

Questions about occupancy.

And questions about previous repairs.

Having someone who understood the process and knew what the insurance company was looking for probably saved me a lot of time.

He was also the person who kept explaining to me why the process worked the way it did.

I Eventually Got My Attorney Involved

The policy jacket became such an issue that eventually I involved my attorney.

The basic position was simple.

The insurance company acknowledged that we had an ownership interest in the property, but at the same time we were not being given the full policy language that controlled the claim.

So the attorney pushed them to either provide the full policy jacket or explain who actually had the authority to provide it.

I would not necessarily tell everyone to immediately get an attorney involved.

But if you are repeatedly asking for the actual policy and nobody will give it to you, eventually you may need someone who knows how to push the issue correctly.

Lender-Placed Insurance Is Not Always Worse Insurance

This was probably the biggest surprise for me.

Before going through this, I would have assumed lender-placed insurance was automatically worse.

That was not really my experience.

In my case, the coverage actually seemed pretty good.

In some ways, it may have been better than some regular insurance policies I have dealt with.

I also noticed that once the claim was approved, things moved surprisingly fast.

My guess, and this is only my personal opinion, is that lenders may have a very different relationship with these insurance companies because they have so many policies with them.

One individual homeowner may have one policy.

A major lender may have thousands.

I cannot say that is why my claim moved the way it did, but it definitely made me think differently about lender-placed insurance.

Everybody Ultimately Wants the Asset Repaired

Another thing I realized during the process was that, despite all the frustration, everyone was basically trying to protect the same asset.

I wanted the property fixed and producing income again.

The lender wanted its collateral protected.

And the insurance company needed to resolve the covered damage.

So even though the communication process could be difficult, there was still a common interest in getting the property repaired.

That helped me understand why the actual repair and payout side moved better than I expected once the claim decision was finally made.

The Payment Surprised Me

This was probably the best surprise.

Once the claim was approved, the payment moved much faster than I expected.

I had assumed I would have to go through another long process with the bank to get the insurance check endorsed.

In my case, I did not even have to get the bank to co-endorse the check.

That was completely different from what I had expected going into the claim.

The communication process was difficult.

The payout process was not.

What I Would Do Differently Next Time

If I ever have to deal with another lender-placed insurance claim, these would be my priorities from day one:

• Ask for the full policy jacket, not just proof of insurance or the master policy.
• Find out exactly who the named insured is.
• Identify the mortgage servicer and understand what information will be routed through them.
• Get the insurance inspector’s contact information when they visit the property.
• Document everything with photos, estimates, reports, emails, and notes from phone calls.
• Keep a timeline of every conversation and document submitted.
• Get a good claims adjuster involved if the claim is significant.
• Expect communication to be frustrating and keep following up.
• If nobody will provide the policy, consider getting legal help to push for it.

My Overall Experience

Would I say lender-placed insurance is easy to deal with?

No.

The communication side can be a pain.

Getting people on the phone can be difficult.

Getting the actual policy can be even harder.

And because the lender may technically be the insured, you may not have the same direct access to information that you are used to with your own insurance policy.

But the part that surprised me was the actual claim.

Once everything was submitted and the decision was made, the process moved quickly and the payment was better than I expected.

So my biggest takeaway is this:

Do not confuse a difficult communication process with a bad insurance claim.

In my situation, getting information was the hard part.

Getting the property covered and getting the money to repair it ended up being much easier than I expected.

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