Banks under fire for prices, terms of forced insurance
Advocates say lenders often get a cut of ‘excessive’ premiums banks choose to replace lapsed homeowners policies.
An insurance controversy affecting hundreds of thousands of people in Florida and other states never touched Laura Digan’s world — until a $23,287.54 bill rocked it.
The “force placed” homeowners insurance imposed by her mortgage company after a policy lapsed was more than four times as expensive as prior coverage. The single mother of two in Palm Beach County said she was shopping for an alternative to last-resort insurer Citizens when the charge hit.
“I was absolutely appalled, horrified, shocked,” Digan said.
She questioned and contested it for months. Mortgage servicer Capital One agreed to reduce the charges days after The Palm Beach Post inquired, Digan said.
But regulatory and legal battles are only beginning to come to a head for a once-obscure part of the insurance business that is attracting increasing scrutiny around the country. It has become a big moneymaker for the financial interests that benefit from it, producing $5.5 billion in premiums annually.