The defendants, or so it is alleged, “manipulated the force-placed insurance market through collusive agreements involving kickback arrangements and other forms of improper compensation,” DiGiacomo says in his Force-Place Insurance class action.
The defendants immediately filed a petition with the court to have the lawsuit dismissed on various grounds. In his decision this past June, District Court Judge Joseph E. Irenas of the US District Court for the District of New Jersey agreed with the defendants and granted their motion, in part, related to DiGiacomo’s breach of contract claims. However, the remainder of the defendant’s motion to dismiss was denied.
The Lender insurance lawsuit will proceed.
Forced-Placed Insurance Lawsuits regularly appear on the horizon when insurance companies and mortgage lenders (most often banks) combine to issue insurance products that are alleged to be more expensive for the homeowner, with less coverage than standard products. The allegations are that higher fees translate into kickbacks benefiting the lender and/or the insurer.
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It’s a reasonable and legal act.
The problem, according to various plaintiffs bringing Forced-Placed Insurance lawsuits, is that insurance coverage is found to have forced-placed insurance terms that are more expensive than standard insurance, and with less coverage. There have also been cases when Force-Place insurance has been mandated where not appropriate.
The case is Robert DiGiacomo v. Statebridge Company LLC et al., Case No. 14-6694, in the US District Court for the District of New Jersey.