Once it has been discovered that a mortgaged property is not insured by the main mortgage, coverage must be "placed" in force by the bank.
Most Bank Mortgage Impairment policies allow 90 days to place alternate coverage from the time it is discovered that an insurance policy has lapsed.
Forced-placed policies are one way to insure a Customer's property when the customer fails to obtain insurance. The amount of coverage is usually the amount of the outstanding loan. Banks can (in most states) charge the premium back to the customer's account.
Most Forced-Placed policies are on a reporting form. 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. The deposit is used up as the reports of property covered accumulate. Insurers then bill additional premium to the bank.