Insurance Company to Refund Massachusetts Homeowners for Improperly Charged Force-Placed Premiums
Insurer to be Audited by the Attorney General’s Office and Will Make Payment to Commonwealth
BOSTON – The largest force-placed insurance company in Massachusetts has agreed to provide refunds to homeowners who were improperly charged for force-placed insurance policies, Attorney General Maura Healey announced today.
Under the terms of the assurance of discontinuance, filed today in Suffolk Superior Court, American Security Insurance Company, a subsidiary of Assurant, Inc. (Assurant), will refund premiums to thousands of Massachusetts homeowners who were required to purchase unnecessary or overpriced force-placed insurance policies.
“We will not allow consumers to be overcharged for insurance products they do not need and will continue to seek accountability from mortgage servicers and their business partners, including force-placed insurance carriers,” AG Healey said. “Force-placed insurance is only necessary when a borrower fails to maintain a homeowner’s insurance policy. This agreement ensures that affected consumers receive the restitution they deserve.”
The settlement provides full refunds for the periods of duplicative insurance coverage for any person who had acceptable homeowners insurance at the same time he or she was force-placed by a mortgage servicer. The settlement also requires refunds for policyholders who were overcharged for force-placed insurance policies because they were mistakenly sold commercial policies rather than less expensive residential policies.
The AG’s Office will conduct an audit to identify eligible Massachusetts homeowners. To date, the Attorney General has identified thousands of potentially improper charges that could result in millions of dollars in relief to Massachusetts homeowners. Aside from amounts identified in the audit, the agreement also requires Assurant to pay $565,000 to the state.
Force-placed insurance is homeowners insurance that a lender or mortgage servicer obtains on behalf of a homeowner if it is believed that the homeowner does not have adequate insurance of his or her own. Premiums for these policies are high, often as much as two- or three-times as expensive as voluntary insurance, and the coverage provided is limited.
Mortgage servicers often rely on force-placed insurance companies, like Assurant, to monitor whether borrowers have maintained appropriate insurance coverage. When a borrower is believed to have failed to maintain appropriate coverage, the insurer issues a force-placed insurance policy and the mortgage servicer charges the premium for the policy to the borrower.
The Attorney General’s Office continues to review force-placed insurance practices. Consumers who have complaints or disputes relating to force-placed insurance or their mortgage are encouraged to file a complaint with the Attorney General’s Office. Consumers who have questions about the settlement or force-placed insurance can call the Attorney General’s Insurance Hotline at 1-888-830-6277.
This case is being handled by Assistant Attorney General Tim Hoitink, Investigations Supervisor Arwen Thoman, Mathematician Burt Feinberg, Legal Analyst Emily Garvey, and Division Chief Glenn Kaplan of Attorney General Maura Healey’s Insurance and Financial Services Division.