LPI is designed to protect the lender's financial interest in a property if the borrower fails to maintain adequate insurance coverage.

At the same time, it provides borrowers with a safety net in the event of property damage or loss, ensuring that they are not left with unmanageable debt.

LPI is a crucial backstop when borrowers inadvertently let insurance policies lapse or do not have sufficient coverage.

In such instances, LPI is automatically applied to cover the property, ensuring that both the lender's investment and the borrower's collateral remain protected.

Lender-Placed Insurance is subject to regulation at both the state and federal levels, ensuring that the interests of all parties are balanced.

Regulatory oversight helps maintain transparency, affordability, and fair practices within the LPI market.