What is Hazard Insurance?

If you have a mortgage on your home, you have hazard insurance on your property. Hazard insurance is a mandatory requirement from your mortgage lender that is used to protect the lender’s financial interest in your property.

Hazard insurance is part of a homeowner’s insurance policy and covers damage to the home caused by events fires, smoke, severe storms, hail, wind, lightning, theft, vandalism, electrical surges, burst pipes and more. Some policies may cover all of these events, while others may only cover some.

The amount of home insurance you have must be at minimum the amount of your mortgage balance, but it is recommended that homeowners have an amount of coverage enough to cover not only the structure of the building, but also for the personal belongings included in the home.

What Happens During a Lapse in Hazard Insurance Coverage?

Sometimes it happens… You forget to pay a bill, a bill does not get delivered to your home, you are overdrawn on your checking account and the home insurance payment doesn’t go through, or any number of situations. What happens when your insurance coverage lapses?

Well, fortunately for many homeowners, there is a backup system set in place so no home is ever without insurance coverage. Many mortgage lenders partner with insurance companies to offer force placed insurance on a home in the event of a lapse in coverage so there is no interruption in protection provided by the hazard insurance.

Unfortunately for many homeowners, the force placed insurance practices that companies engage in may be costing homeowners thousands of dollars in unnecessary insurance, and could cost some homeowners their home.

Force Placed Insurance: Alleged Improper Practices

Some companies have used force placed insurance to take advantage of customers and have been allegedly engaging in exclusivity agreements with each other to further their profits at the expense of the consumer.

Some consumers who had force placed insurance on their home when their hazard insurance lapsed noticed that the cost of the insurance was double to ten times the cost of the original insurance on the property.

These consumers allege that their mortgage and home insurance companies force-placed insurance policies with excessive and unnecessary amount of coverage on the property. Some consumers reported that they lost their home to foreclosure because of the incredibly high insurance premiums from the force placed insurance on their homes.

When the mortgage companies and insurance companies work together to force place insurance, when exclusivity agreements are in place, the mortgage company may receive illegal kickbacks or “referral fees” from the insurance company and the insurance company has free reign to place any kind of policy on the home unless there are proper check and balances in place.

Some consumers claim they were unaware of such practices because their home insurance was automatically deducted from their bank account each month and they didn’t keep too close of an eye on their account balances. It wasn’t until months later that they discovered what was happening.

Force Placed Insurance Lawsuit Information

A number of companies have had lawsuits filed against them alleging illegal practices with regard to force placed insurance. Lender JP Morgan Chase and insurance company Assurant were two big names in a recent lawsuit that was settled out of court. According to the lawsuit, the companies force placed insurance with excessive levels of coverage and JP Morgan received $1 billion in “referral commissions” from Assurant.

If you had hazard insurance force-placed on your property by your mortgage lender, you may have a legal claim. Our attorneys can provide you with a free case review and can help you determine if filing a force placed insurance lawsuit is right for you.

Join a Free Force-Placed Insurance Class Action Lawsuit Investigation

If you paid for force-placed insurance from a lender, you may be eligible to join a free class action lawsuit investigation into the improper charges you may have paid.

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