If your loan contract requires this insurance and it isn’t maintained, you have basis for force-placing. And since this insurance isn’t exempt under the 1024.37 force-placement rules, in my opnion, it would be covered.
1024.37(a)(2) Types of insurance not considered force-placed insurance. The following insurance does not constitute “force-placed insurance” under this section:
(i) Hazard insurance required by the Flood Disaster Protection Act of 1973.
(ii) Hazard insurance obtained by a borrower but renewed by the borrower’s servicer as described in § 1024.17(k)(1), (2), or (5).
(iii) Hazard insurance obtained by a borrower but renewed by the borrower’s servicer at its discretion, if the borrower agrees.
(b) Basis for charging borrower for force-placed insurance. A servicer may not assess on a borrower a premium charge or fee related to force-placed insurance unless the servicer has a reasonable basis to believe that the borrower has failed to comply with the mortgage loan contract’s requirement to maintain hazard insurance.
My understanding of your first question was that it was a construction permanent loan. But if it is temporary financing (i.e. construction loan only) RESPA wouldn’t apply and the RESPA force-place rules wouldn’t apply. Look at 1024.5(b) for the definition of temporary financing: https://www.bankersonline.com/regs/12-1024/12-1024-005.html.