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Force-Placed Insurance
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Insurance companies, banks and other financial firms face force-placed insurance lawsuits alleging their force-placed insurance is offered at outrageous rates because of the relationship between banks and insurance companies. Allegations have been made that force-placed home insurance is much more costly than traditional home insurance and could be a conflict of interest for some financial institutions.
According to Bloomberg (05/06/12), banks and mortgage services have agreements with insurance companies to buy policies on behalf of a homeowner whose insurance coverage has lapsed. The ability to provide force-placed insurance allows banks to protect properties that they have the mortgage for in case of disaster. The bank forwards the premium to the insurer, the insurer pays a commission to the bank and the homeowner is billed for the premium and commissions.
Critics say that once the financial firms realized there was profit to be made in force-placed insurance, reportedly to the tune of $5.5 billion in 2010, financial institutions formed their own specialty insurance companies, so they could offer force-placed insurance on properties without insurance coverage.
Furthermore, some critics argue that force-placed policies have less protection than cheaper policies and the policies usually protect the lender, not the homeowner.
Force-placed insurance lawsuits have reportedly been filed against insurers and banks for force-placed insurance. A lawsuit against Wells Fargo and QBE was recently granted class-action status by a judge in Florida who alleged the two companies "colluded in a scheme to artificially inflate the premiums charged to homeowners" (as quoted in Business Insider; 02/27/12).
Plaintiffs claim consumers are charged excessive and unreasonable premiums for their force-placed insurance. They argue that force-placed insurance can cost up to 10 times more than traditional homeowners insurance, often with inferior coverage. Meanwhile because banks have set up their own specialty insurance affiliate companies, there are concerns that the financial institutions are involved in a conflict of interest. Finally, there are allegations that unrelated companies may have offered kickbacks for forced-place insurance policies, offering the banks an incentive to pass customers along to force-placed insurance providers.
According to reports, up to 31 financial institutions have been subpoenaed by the New York State Department of Financial Services for an investigation into the overlap between banking and insurance. Meanwhile, more force-placed insurance lawsuits may be filed against insurance companies and banks for unreasonably high force-placed insurance premiums.
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Forced-Place Insurance Complaint
According to Bloomberg (05/06/12), banks and mortgage services have agreements with insurance companies to buy policies on behalf of a homeowner whose insurance coverage has lapsed. The ability to provide force-placed insurance allows banks to protect properties that they have the mortgage for in case of disaster. The bank forwards the premium to the insurer, the insurer pays a commission to the bank and the homeowner is billed for the premium and commissions.
Critics say that once the financial firms realized there was profit to be made in force-placed insurance, reportedly to the tune of $5.5 billion in 2010, financial institutions formed their own specialty insurance companies, so they could offer force-placed insurance on properties without insurance coverage.
Furthermore, some critics argue that force-placed policies have less protection than cheaper policies and the policies usually protect the lender, not the homeowner.
Force-Place Insurance Lawsuits
Plaintiffs claim consumers are charged excessive and unreasonable premiums for their force-placed insurance. They argue that force-placed insurance can cost up to 10 times more than traditional homeowners insurance, often with inferior coverage. Meanwhile because banks have set up their own specialty insurance affiliate companies, there are concerns that the financial institutions are involved in a conflict of interest. Finally, there are allegations that unrelated companies may have offered kickbacks for forced-place insurance policies, offering the banks an incentive to pass customers along to force-placed insurance providers.
According to reports, up to 31 financial institutions have been subpoenaed by the New York State Department of Financial Services for an investigation into the overlap between banking and insurance. Meanwhile, more force-placed insurance lawsuits may be filed against insurance companies and banks for unreasonably high force-placed insurance premiums.
Force-Placed Insurance Legal Help
If you or a loved one has suffered damages in this case, please click the link below and your complaint will be sent to a Force-Placed Insurance lawyer who may evaluate your claim at no cost or obligation.Last updated on
FORCE-PLACE INSURANCE LEGAL ARTICLES AND INTERVIEWS
Force Placed Insurance is a Forced Relationship of the Worst Kind
Forced-Placed Insurances Leaves Homeowners Out in the Cold
Another Forced-Placed Insurance Class Action in the Works
October 11, 2016
Los Angeles, CA: Anyone having trouble believing that their insurance company, or bank could collude in such woeful, self-interested activity as Lender insurance need only look to the alleged activities of State Farm, and Wells Fargo as an indication of behavior unbecoming to their clients, customers and American values. READ MORE
Forced-Placed Insurances Leaves Homeowners Out in the Cold
September 6, 2016
Washington, DC: There is little doubt that the act of allowing homeowner insurance to lapse on a mortgaged property is not, with little exception, done maliciously. For most, the lapse of property insurance has more to do with human error (forgetting to renew), or financial hardship (“do we pay the insurance this month, or feed the baby?”) There is also little doubt, however that while Lender insurance is a perfectly legal and appropriate response in order to protect the investment of the lender, the extraordinary costs associated with lenders insurance are both mean-spirited and unnecessary. READ MORE
Another Forced-Placed Insurance Class Action in the Works
August 17, 2016
New York, NY: Yet another Lender insurance class action lawsuit could soon be in the pipeline with investigation into the machinations of Cenlar FSB, identified as a leading provider of mortgages and mortgage servicing suspected of participation in a ‘cozy’ relationship with a provider of lenders insurance. READ MORE
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READER COMMENTS
David Delaughter
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elsie Chavez
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Pennsylvania
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Massachusetts
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Florida
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Washington
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The bank placed a policy that only covered the equity loan of $50,000 and not my equity of $130,000. They are charging me $900 a year for this. The average price of full coverage in my area is about $500 a year. I think I have been paying this for about 10 years now.
Tennessee
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Anonymous
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A friend of mine mentioned years ago in regards to WHITE COLLAR CRIME; he said they should GO TO JAIL and not just be slap settlement money. If you look at the settlement with CHase/morgan. It is said Morgan netted $600 million for 2.3 Billion in forced placed insurance, but they will paid only HALF $300 million in their settlement. That still allowed Morgan/Chase to make $300 Million for "legal" stealing from us their customers.
Now that still really GOOD PAYCHECK and WORTH THE HEADACHE OF A LAWSUIT.
Florida
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Florida
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Missouri
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Colorado
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Florida
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Virginia
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