JPMorgan and Assurant Settle Force-Placed Insurance Lawsuit
JPMorgan Chase & Co. and Assurant Inc. have agreed to a settlement that will resolve allegations made under a homeowners insurance-based class-action lawsuit. The lawsuit alleged that the two companies overcharged borrowers for what is known as force-placed insurance, resulting in homeowners paying up to 10 times what they would have paid under their own coverage.
Suit Alleges Companies Illegally Issued Forced-Homeowners Insurance
The class-action lawsuit tackled an issue that many lenders and insurance companies have faced in recent years: forced-homeowners insurance.
Force-homeowners insurance — also known as force-placed insurance — is coverage imposed on a homeowner by either a lender or an associated insurance company.
Individuals who borrow money from a lender to purchase a home are typically required to buy homeowners insurance in the event that the home is damaged or destroyed before the loan is paid off. If a homeowner allows coverage to lapse, the lender is able to impose its own coverage on the homeowner.
But homeowners in recent years have complained that lenders have imposed their own coverage — which authorities say can cost 10 times more than a homeownerâ€™s own coverage — despite borrowers making their homeowners insurance payments on time.
Authorities have alleged that many companies, including JPMorgan Chase, are participating in this practice for financial gain via commissions and other fees from insurers.
Homeowners Affected by Force-Placed Insurance to Receive Share of $300 Million
As a part of the proposed settlement, which reports show was filed last Friday in Miami federal court, JPMorgan and Assurant agreed to provide a partial refund or credit in the amount of 12.5 percent of the net premium for each policy covered in the settlement.
Hundreds of thousands of homeowners who borrowed from JPMorgan since 2008 are eligible for the refund or credit proposed in the settlement. In order to receive money, however, class members must file formally. If all homeowners file, the cost to the companies could exceed $291 million.
JPMorgan didnâ€™t admit to any liability or wrongdoing and the settlement, as noted by a spokeswoman, â€œwill have no expected impact on our financials.â€
Assurant released a sole statement explaining that it provided â€œlender-placed insurance on thousands of homes where original coverage has lapsed, in accordance with the terms of the mortgage and all applicable regulations.â€
The proposed settlement is still awaiting court consent. If approved, it will be one of the first and biggest in a number of plaintiffsâ€™ lawsuits over force-placed insurance.
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