Class action lawyers have launched an investigation into an alleged industry-wide practice of banks and lenders implementing expensive and overpriced force-placed insurance to homeowners.

More specifically, force-placed hazard insurance in California has become a rampant problem in the state as expensive living costs do not appear to be decreasing.

Force-placed insurance is coverage pertaining to flood or other catastrophic disasters that may heavily damage the home or property, which is enforced by the mortgage company if the homeowner’s home insurance policy becomes canceled.

Homeowners are required to maintain home hazard insurance to protect the properties’ in case of the disaster.

Even though homeowners have this policy in place attached to their mortgages, things can become problematic for the homeowner if the policy becomes insufficient or canceled.

Many homeowners complain that force-placed insurance is much more expensive than the initial home insurance, as well as provided little coverage.

Problems with Force-Placed Hazard Insurance in California

Force-placed hazard insurance in California has become especially problematic, as the homes are already high priced. The investigation alleges that banks and lenders involved in the mortgage industry have been charging homeowners premium prices for their force-placed insurance policies.

This has allegedly resulted in force-placed hazard insurance in California and other states becoming financially abusive towards its customers, who were forced to pay much more for their force-placed insurance policy than a policy they could have purchased on the open market.

The mortgage companies would allegedly take a part of the homeowners’ insurance premium and gives it to the bank as kickback, further encouraging the problem.

Force-placed insurance may also be billed retroactively, or when the property insurance had been billed during the period of time their previous policy had lapsed.

Furthermore, there have been reports of homeowners being billed for force-placed insurance even thought they already had an active home insurance policy.

While force-placed insurance is not illegal, lenders and banks have been allegedly overcharging the homeowners’ insurance policies in exchange for financial kickbacks from the insurance companies.

The investigation regarding force-placed hazard insurance in California has already spawned several lawsuits, as Citigroup Inc. had recently agreed to settle a class action lawsuit brought forward by homeowners alleging improper force-placed insurance.

Other big banks including JP Morgan Chase, Wells Fargo, and Bank of America are preparing their own force-placed insurance settlements.

Lawyers are currently encouraging homeowners who experienced force-placed hazard insurance in California in the last two years, to file legal action.

By contacting a specialized lawyer, homeowners who lost money to force-placed hazard insurance in California can determine if they are eligible to file a claim.