Loan Officer Practice Exam 2025 – Comprehensive All-in-One Guide for Exam Success!

To avoid a premium charge for force-placed insurance, it is essential for the borrower to provide hazard insurance information. This requirement allows the lender to verify that the borrower has an existing insurance policy that covers the property. Force-placed insurance is typically instituted by the lender when a borrower fails to maintain adequate home insurance, thereby protecting the lender's interest in the property. By submitting proof of hazard insurance, borrowers can demonstrate their compliance with the insurance requirement set by the lender, thereby circumventing additional charges associated with force-placed insurance, which is generally more expensive and provides limited coverage compared to a standard homeowners insurance policy.

The other options, while potentially relevant in different contexts, do not address the specific requirement needed to avoid the premium charge effectively. Paying for insurance upfront is a payment strategy that does not pertain to proof of coverage, having a home warranty does not replace the need for property insurance, and switching providers does not guarantee that the lender has current proof of insurance.