What is Lender-Placed Insurance?

Lender-placed insurance is hazard insurance that is placed on a home, under terms of the mortgage, if a homeowner's insurance lapses or is cancelled. It's an important part of the mortgage process, protecting the investments of both homebuyers and their mortgage lenders. Policies are issued only after a customer fails to show proof of required coverage, and the customer may replace the lender-placed policy with the insurance of their choice at any time.