AG Enters into Third Settlement Regarding Force-Placed Home Insurance in Past Year
BOSTON – (RealEstateRama) — In the third such settlement in the past year, a company has agreed to provide refunds to Massachusetts homeowners who were improperly charged for force-placed insurance policies, Attorney General Maura Healey announced today.
Today’s settlement with QBE Insurance (QBE) requires refunds for Massachusetts homeowners whose mortgage lenders wrongly force-placed the consumers with QBE despite the fact that the consumers already had home insurance with other companies, as well as consumers who were overcharged by QBE because their homes were misclassified as commercial properties.
“We will continue to ensure that mortgage lenders and their insurance business partners do not overcharge Massachusetts residents or force them to pay for unnecessary insurance,” AG Healey said. “Today’s agreement provides Massachusetts homeowners the restitution they deserve.”
The AG’s Office will conduct an audit to ensure all eligible consumers receive full restitution. To date, the AG’s Office has identified potentially improper charges that could result in more than $1 million in relief to Massachusetts homeowners. Aside from amounts identified in the audit, the agreement also requires QBE to pay $375,000 to the state.
Force-placed insurance is property insurance taken out by a mortgage lender to protect a home when the homeowner does not have insurance in place. Mortgage servicers often rely on force-placed insurance companies, like QBE, to monitor whether borrowers have maintained appropriate insurance coverage.
When a borrower is believed to have failed to maintain appropriate coverage, the insurer issues a force-placed insurance policy and the mortgage servicer charges the premium for the policy to the borrower. Force-placed policies are considerably more expensive than regular homeowners insurance policies.
In November 2015, American Security Insurance Company, a subsidiary of Assurant, entered into a settlement with the AG’s Office in which it similarly agreed to refund premiums to thousands of Massachusetts homeowners who were required to purchase unnecessary or overpriced force-placed insurance policies. In February, mortgage lender and servicer HSBC agreed to refund Massachusetts consumers the improper compensation it received tied to force-placed insurance.
The AG’s Office continues to review force-placed insurance practices. Consumers who have complaints or disputes relating to force-placed insurance or their mortgage are encouraged to file a complaint with the AG’s Office. Consumers who have questions about the settlement or force-placed insurance can call the Attorney General’s Insurance Hotline at 1-888-830-6277, Extension 3.
This case was handled by Assistant Attorney General Tim Hoitink, Investigations Supervisor Arwen Thoman, Mathematician Burt Feinberg and Division Chief Glenn Kaplan of AG Healey’s Insurance and Financial Services Division.