As if homeowners needed another reason to be wary of their insurance company, now some homeowners should be worried about the combined forces of both their insurance company and their bank ripping them off.
Just how are they doing this? Imagine that your home has either had a cancelled (either by you or your company) or lapsed insurance policy before , and since you need proof of that insurance for your mortgage but no longer have it, your bank decides to force place insurance on your home. Now what if the insurance that you are now forced to pay for is more expensive and provides less coverage than a normal policy, and if you didn’t pay the new insurance premium your home could be at risk for foreclosure. Are you a little enraged by this scenario? Trust us, you’re not alone.
Homeowners all over the country have cried out against their lender and their chosen insurance company for the conspiracy completely derived out of banks being able to protect any properties they hold mortgages for.
So why exactly are these premiums so much more expensive if the coverage is considerably less? Well, the bank pays the initial premium amount to the insurance company where they then pay the bank a commission (really a kickback)- the policyholder will get billed for both the initial premium amount and the commission paid to the bank.
Force Placed Insurance Lawsuits
With all of this information it’s easy to understand why many lawsuits against banks and insurance companies alike have risen over the last couple of years. Even insurance regulators within the state of Texas have called the widely rejected practice into question.
Citigroup Inc., J.P. Morgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. have come under fire with class action lawsuits brought against them by homeowners- and the settlements are victorious for homeowners.
In 2013 alone:
- Wells Fargo settled to pay up to $19 million to homeowners who are eligible for up to a 25% refund for force placed insurance premiums they’ve previously paid to their bank.
- In Septemer, J.P. Morgan agreed to pay $300 million to almost 800,000 homeowners with up to a 12.5% refund on the force placed hazard insurance premiums those homeowners had to pay for force placed insurance.
This year, Citigroup agreed to pay $110 million to an undisclosed amount of homeowners with up to a 12.5% refund on force placed hazard insurance premiums and 8% refund on force placed wind insurance premiums and flood insurance premiums. The new settlements will also ban Citigroup from being able to accept commissions from insurance companies for at least six years. Citigroup claims that the company stopped receiving commissions in 2013, however some within the company have said that the bank received 15% commission on hazard insurance premiums.
Homeowners under Citigroup’s control were charged $758 million in force placed hazard insurance premiums and $173 in force placed flood insurance premiums. While the settlement may seem victorious, we have to note that $110 million absolutely does not sufficiently cover the amount that homeowners have paid for insurance premiums they didn’t even want in the first place, on top of damages and attorneys’ fees.
J.P. Morgan claims the bank hasn’t accepted commissions from insurance companies.
Details regarding other nationwide force placed insurance lawsuit settlements from Bank of America and Wells Fargo should be later this year.
Don’t let the insurance companies and banks gang up on you like they’ve done to thousands of other homeowners. Homeowners are even susceptible to fall victim to paying for force placed wind and hail insurance premiums!
If you find that you’ve been cornered into paying expensive premiums by your bank, contact our office today at (713) 864-3000. Don’t let big companies gamble with your home and livelihood.