The settlement will benefit some 130,000 plaintiffs who allege they were hit with hazard, flood-gap and/or lenders insurance against wind damage that was both excessive, expensive and provided less coverage than standard policies, or so it is alleged. What’s more, plaintiffs alleged in their Force-placed insurance lawsuit that various kickbacks were involved, serving to further drive up the costs to homeowners.
According to court documents, plaintiffs who had mortgage agreements with PNC Bank NA noted that the bank required homeowners to maintain hazard, wind and on occasion flood insurance on the mortgaged property. Agreements also provided PNC Bank with the right and obligation to force-place coverage on the property if it were determined that existing insurance coverage was either inadequate or had lapsed.
The agreements indicated that the financial obligation for the Force-Place Insurance would be the responsibility of the homeowner.
While the capacity for a lender to ensure adequate insurance to protect the investment is perfectly legitimate and without debate, plaintiffs note that mortgage agreements are alleged to have included language that suggested the cost of coverage could significantly exceed any cost associated with a homeowner’s voluntary coverage.
That opens the barn door for excessive forced-placed insurance terms. And it is alleged that excessive fees resulted. It is alleged that plaintiffs not only endured having Lender insurance forced onto their properties, fees are also alleged to have included kickbacks that insurance companies allegedly paid to PNC for referrals, and for services that were below cost.
A number of other Forced-Placed Insurance Lawsuits were settled in similar fashion in recent months, paving the way for final approval of the $32.3 million settlement in the PNC Bank NA case.
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“This result is all the more extraordinary because it involved the resolution of complex issues against a rising tide of adverse decisions from federal district and appellate courts - decisions class counsel would certainly distinguish, but their opponents would just as vigorously assert,” their motion said.
Lead plaintiff in the lenders insurance class-action lawsuit is Enrique Montoya. The Force-Place Insurance class action is Enrique Montoya et al. v. PNC Bank NA et al., Case number 1:14-cv-20474, in the US District Court for the Southern District of Florida.