Floridians have been increasingly victimized by banks and other lenders through forced insurance policies. Also known as lender placed insurance policies; these are insurance policies that banks and other lenders purchase at grossly inflated premiums.
Generally, a home mortgage agreement or a car loan contains a promise whereby a borrower must maintain an insurance policy on the property. If those policies lapse, the lenders may legally re-insure their home loan by buying insurance to replace it and making the homeowner pay for it. Far too often however, greedy lenders use this provision as a way to take advantage of unbeknownst consumers by drastically increasing the insurance prices on their homes or cars as compared to those prices consumers could readily purchase themselves.
In fact, there have been reports of lenders charging borrowers more than the actual cost of the insurance policy. A lender retaining this kind of commission is improper and a borrower is entitled to have the excess cost refunded. The attorneys at Freidin Brown, P.A. have experience handling unfair and deceptive business practices such as this.
Additionally, greedy lenders who learn that an insurance policy is set to expire or be cancelled may purposefully fail to inform the borrower, so that once the policy has lapsed the lender can impose a more expensive forced placed policy. While lender forced insurance policies are more expensive than a policy a homeowner can purchase on their own, they almost always offer the borrower less protection.
To avoid forced placed insurance, consumers should always remember to keep their home and car insurance policies current. If you receive a cancellation notice from your insurance policy or are aware that it is set to lapse, then it is imperative to begin to start shopping for a new insurance policy as soon as possible, so that your lender cannot impose a forced placed insurance policy on you.
If you believe a lender has taken advantage of you through a forced insurance policy, you may be entitled to compensation. Please contact a Freidin Brown, P.A. attorney to discuss your legal rights.