Wells Fargo Bank and insurer QBE offered to pay $19.25 million to more than 24,000 Florida homeowners in a proposed settlement filed in U.S. District Court in Miami last week, the Palm Beach Post reported.
Without acknowledging wrongdoing, the settlement addresses a class-action suit claiming the companies inflated premiums by as much as 6 times by imposing force-placed insurance.
With 35 percent of the U.S. market, Florida is the epicenter for this type of insurance, which can be applied by lenders when a homeowner’s insurance is canceled, is allowed to lapse or is deemed insufficient.
Because both insurers and loan services are incentivized to replace a homeowner’s insurance with a more expensive policy, provisions in the Dodd-Frank Act require force-placed insurance to be “bona fide” and reasonable.”
Plaintiffs attorney Adam Moskowitz said that the settlement’s cash and credit refunds of 25 percent of premiums represent the biggest proposed settlement of any force-placed insurance case he knows of, the Post said.
“It’s going to have a real impact on people’s lives,” he told the newspaper.
Moskowitz’s firms and others are also pursuing national cases against Chase, Bank of America, Citi and HSBC, he said. [Palm Beach Post] –Emily Schmall