Force-placed home insurance in California is common practice, but a growing number of customers are filing lawsuits for essentially ripping them off.

Indeed, a string of lawsuits is targeting force-placed home insurance in California for overcharging homeowners, especially those who can least afford it.

A number of banks have been targeted in force-placed home insurance lawsuits, including several major financial institutions.

Citigroup Inc. agreed to settle a class action lawsuit from homeowners who claimed force-placed insurance was an unfair practice.

J.P. Morgan Chase & Co. is facing a similar lawsuit, and is currently waiting for approval on a similar settlement.

Bank of America Corp. and Wells Fargo & Co. are both reaching settlements as well.

As these major banks tie up their settlement agreements, smaller banks are beginning to be targeted over force-placed home insurance in California as well.

Though banks often refer to this practice as “lender-placed insurance,” which seems less threatening, homeowners are beginning to realize that this can be disastrous for their finances.

According to critics of the practice, force-placed home insurance in California is a method developed by banks to wring out yet more money from their customers.

How Does Force-Placed Home Insurance in California Work?

If you are a homeowner with a mortgage, there is likely a provision included that says if you stop paying your property insurance, your bank can buy it for you and force you to foot the bill.

While insurance is necessary—indeed, if your home is damaged or destroyed without insurance, you could be in big financial trouble—this method of insurance can be equally damaging.

This is because banks tend to buy policies that are significantly more expensive than the ones homeowners themselves would choose if given the opportunity.

In some cases, banks can purchase insurance up to ten times as expensive as what is available to homeowners on the open market.

While companies that sell force-placed home insurance in California claim that this major pricing difference is to guarantee that all of the houses they are tasked with insuring are covered, these policies often do not provide the same level of insurance coverage as those available to homeowners for less money on the open market.

Banks also often receive kickbacks from these insurance companies, which can lead to banks shortening grace periods for customers who may miss a property insurance payment.

In just the last few years, a rapidly growing number of homeowners have filed lawsuits against banks over force-placed home insurance in California. And, quite recently, these lawsuits have begun delivering some results for homeowners.

Settlements have been reached nationwide on force-placed home insurance lawsuits. J.P. Morgan, Citigroup, and others have agreed to pay hundreds of millions of dollars in settlement money to injured homeowners.

If you have suffered from homeowner’s insurance violations such as unfair force-placed home insurance in California, you may be able to take legal action in a homeowner’s insurance lawsuit against your mortgage company.