You’re required to have certain types of insurance for your home. If you don’t purchase an insurance policy you’re required to have, your insurance lapses, or you don’t have enough coverage, we’ll purchase a policy for you. The cost will be added to your monthly mortgage payment. We do this so your home can be repaired or rebuilt if it’s damaged. This is called lender-placed insurance, and it has serious disadvantages compared to most insurance policies.

Here’s why it’s best to avoid lender-placed insurance:

• Cost. The premiums for lender-placed insurance are usually more expensive.
• Coverage. You usually get less coverage than if you purchased a policy on your own. For example, lender-placed homeowners insurance only covers the replacement cost of your home; it doesn’t cover the contents of your home or protect you from theft or personal liability.

Paying for lender-placed insurance

If a lender-placed insurance policy is required, we’ll add the cost to your monthly mortgage payment. We’ll keep it in an escrow account until your insurance bills are due. Then we’ll use that money to pay the bills on your behalf.

Canceling lender-placed insurance

To cancel lender-placed insurance, you need to purchase a policy yourself or raise your coverage to the amount that’s required. To show that you’ve met the requirements, send us a copy of the declarations page of your policy (usually the first page). We’ll cancel your lender-placed insurance once we’ve confirmed you have enough coverage.

• What’s lender-placed insurance? If your insurance lapses or you don’t have enough coverage, we’re required to purchase insurance on your behalf. We do this so your home can be repaired or rebuilt if it’s damaged.
  
  Coverage requirements for different types of insurance:
  • Homeowners insurance. You’re required to have at least 100% of the estimated cost to repair or replace your home covered. Learn more about homeowners insurance.
  • Flood insurance. Your flood insurance coverage has to be at least equal to the lowest of these options: 100% of the estimated replacement cost value for your property; combined outstanding balance of all loans and maximum line of credit limits; the maximum amount of coverage available under the National Flood Insurance Program (currently $250,000.00 for residential buildings)Keep in mind that there are pros and cons to only getting the minimum amount of insurance required. If you only have the minimum amount required, it may not be enough to pay for all of the needed repairs after a flood. Be sure to discuss your flood insurance needs with your insurance company. Learn more about flood insurance.
     
• What’s the difference between lender-placed insurance and insurance I purchase myself? Insurance you get through your insurance agent provides the best and most complete coverage. Lender-placed insurance is more expensive and covers only the structure of your property – it doesn’t cover the contents of your home or protect you from personal liability.
   
• Will Republic Bank purchase lender-placed insurance without my knowledge? No. If we find a problem with your insurance, we’ll send you letters explaining what you need to do. If we still don’t receive acceptable proof of insurance, we’ll let you know we’re getting a lender-placed policy for you.
   
• How will I be billed for lender-placed insurance? We’ll add the insurance premium to your monthly payment. The money will stay in an escrow account until your bills are due. Then we’ll use that money to pay the bills on your behalf.
   
• Can I cancel lender-placed insurance? Yes. When you provide proof of acceptable coverage, we’ll cancel the lender-placed policy.
   
• What should I do if I can’t afford my insurance premium? If your insurance isn’t included in your monthly payment and you’re unable to pay the premium, please call us at 1-866-596-2739 before your coverage expires. We can discuss options for paying the premium on your behalf. If we advance the premium for you, we’ll add the cost to your future monthly mortgage payments.