I had to look this up myself. "Force placed insurance" is also known as "forced place insurance". Basically, it is Insurance which is forced into place.
The right to force Insurance upon another person is a right generally given up by a debtor to a creditor. The creditor obtains the right to force Insurance upon the debtor in order to protect the creditor's asset in a transaction. A simple and familiar example of such a situation is a Mortgagee's loan of money to a Mortgagor to buy or remain in a house or home. Ordinarily the Mortgagee obtains the right to protect the 'asset' of the house when the Mortgagor fails to protect that asset as the Mortgagor contractually agreed to do, such as by failing to make the Premium payments on a Homeowner's Insurance Policy.
Mortgagees and their supposed agents or assignees (often, "Mortgage Servicers") to which the right to place Homeowner's Insurance by force is given, are currently under investigation beginning in New York State. See Louise Story, "Big Banks Face Inquiry Over Home Insurance" p. B1, col. 6 (New York Times Nat'l ed., "Business Day" Section, Wed., January 11, 2012).
The forcers of Homeowner's Insurance placement are under investigation for allegedly using chosen high-priced purveyors of Homeowner's Insurance, from whom they may or may not get a kickback or with whom they may have an ongoing relationship such as belonging to the same parent corporation. Such are the allegations under investigation at any rate. See id.
"Where there's a will, there's a way." In the current Financial Fiasco through which we are all now living, where there's a way to make a buck, there seems to be a will to do it. Good Faith, Bad Faith, no faith. The end result is forced place (or force placed) Insurance. It matters a great deal to the Mortgagor whether forced place Insurance is done in Good Faith, or not: It is already certain that higher Premiums will be charged whenever Insurance is forced into place, and that is enough. Mortgagors should not also be made to pay an even greater increase in Premiums for Bad Faith. Time and the New York investigations may begin to tell, starting now.
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