If a Canadian homeowner allows their property insurance policy to lapse or cancels it while carrying an active mortgage, the lending institution will be notified immediately by the insurance provider. To protect its financial security interest in the property, the mortgage lender will forcefully purchase a costly "force-placed" or lender-placed insurance policy and bill the premium costs directly to the borrower. Force-placed insurance is notoriously expensive, offers extremely narrow coverage that protects only the lender's financial stake in the physical structure, and excludes personal contents and liability protection entirely.
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