Is Lender placed insurance expensive? Why?

Yes, Lender placed insurance can be 2-6 times more expensive than a regular insurance policy you can purchase on your own. When you purchase a voluntary insurance policy, the company will gather information about the property such as materials used (wood, brick), size, location and the condition of the property. After these statistics are gathered the carrier will do a risk analysis to determine the premium. With lender placed insurance the lender does not have the ability to perform a risk analysis therefore the policy provided is minimal coverage with higher rates.