Every time I think about force-placed insurance, my stomach turns. It is the definition of kicking someone while they’re down (and in some cases, pushing them down first). As most people know, mortgage lenders require homeowners to maintain insurance on their property to protect their home (the bank’s collateral). When a homeowner fails to do this, the mortgage servicer will acquire what’s referred to as “force-placed” or “lender placed” insurance. This force-placed insurance is often times anywhere from two to ten times as expensive as a normal homeowners policy. And it usually doesn’t cover contents or liability.
The reason force-placed insurance makes me sick is because mortgage servicers do not look for favorable rates for homeowners. To the contrary, they charge homeowners ridiculous premiums. Many times, these homeowners are already in a financial bind, and servicers just pile on excessive charges. Well, people are starting to notice this. As I wrote about here, force-placed insurance giant Assurant/American Security Insurance Company was fined $14 million by the New York State Department of Financial Services.
Well, it turns out this wasn’t the first slap on the wrist that Assurant/American Security Insurance Company has received. In October 2012, the California Department of Insurance announced that Assurant/American Security Insurance Company would be lowering its rates in California by $47.2 million for its policyholders. Why? Basically because American Security Insurance Company had been overcharging homeowners. This rate-lowering impacted 74,000 Californians.
If you believe you have been overcharged for force-placed insurance, or had force-placed insurance wrongly charged to you while you maintained conventional homeowners insurance, call the attorneys at Duke Seth, P.L.L.C. at (214) 965-8100.