Wells Fargo Agrees to Forced Insurance Settlement
Wells Fargo (NYSE:WFC) has agreed to settle a lawsuit brought forth by angered homeowners who felt as though they were being taken advantage of and ripped off when the bank took out pricey home insurance policies on their behalf.
Documents filed on Wednesday in a Miami federal court reveal that Wells Fargo and the two companies where it bought the insurance, Assurant Inc. and QBE, have agreed to repay select homeowners up to 11 percent of the premiums that they paid, MarketWatch reports. Total costs of the settlement and number of homeowners affected were undisclosed.
The situation unraveling can occur when a homeowner takes out a mortgage but neglects to buy an adequate property insurance policy to cover the assets that are still being paid off. The bank can then buy insurance for the homeowner, or “force place” the insurance policy.
A Wells Fargo spokesman told MarketWatch that the bank still believed that the insurance it bought “was issued in accordance with the terms of the mortgages and applicable laws,” but that the bank decided to settle “to avoid protracted litigation.”