Homeowners carry insurance to provide financial protection in the event their home suffers damage from a fire, hurricane or other casualty. Banks or other corporations holding your mortgage also want financial protection to secure the value of their collateral. That makes sense. If a fire destroys your house, and you don’t have insurance, then your home and the bank’s investment literally go up in smoke.
What does the bank and other corporations do to protect their investment? They buy insurance and require the homeowner to pay for it. They call it “lender insurance”. Consumer advocates like me call it “force-placed” insurance. Here’s the rub.
Many banks charge homeowners “forced-placed” insurance premiums that that are often 600% higher than the fair market cost. That’s not all. The banks often buy the insurance from a company that they own themselves. Sounds shady?
The banks and other corporations, in these situations, don’t shop around to get the best price. If you have received a letter or an email from your bank, mortgage company or other corporation holding your mortgage, that they have placed insurance on your home, then you need to check into it.
If you believe you’ve been a victim of excessive and unsavory lender insurance practices, feel free to post a comment about it, or email me.