In a class action of Florida homeowners who were given force-placed insurance in their dealings with Wells Fargo Bank, Podhurst Orseck and several Miami-Dade County law firms have agreed to settle for $19.25 million plus up to $5.48 million in plaintiffs’ attorney costs and fees.
The class action complaint, filed in 2011 and certified last year, represented a group consisting of 24,000+ notified homeowners. From April, 2006 through February, 2013, the class members were charged an estimated $77 million for forced-placed insurance, according to settlement documents.
Forced-placed insurance became a boon in the wake of the housing busts, with industry analysts suggesting profits in the billions of dollars. Lenders such as Wells Fargo often order forced-placed insurance when individual property owners declined to obtain such coverage for themselves.
At issue in this case was whether Florida homeowners were overcharged when Wells Fargo assigned property insurance from QBE Insurance on their homes. The suit alleged that, “Wells Fargo and QBE inflated these insurance premiums and profited from kickbacks and commissions from the force-placed insurance scheme.”
The lawsuit charged that Wells Fargo and QBE, the second-largest provider of force-placed insurance, had an exclusive agreement in which QBE searched the bank’s records for homeowners with lapsed policies.
After the lawsuit was filed, Wells Fargo said it would no longer purchase force-placed insurance from QBE in the State of Florida.
The settlement agrees to refund premium-paying borrowers 25 percent in cash. Borrowers who were charged, but did not pay the premium, will receive a credit of twenty-five percent off their bill.
Podhurst Orseck attorneys Aaron S. Podhurst, John Gravante III, Peter Prieto and Matthew P. Weinshall represented clients in this matter. Two other similar class action suits have been filed in New York State.