In a lawsuit achieving class action status, HSBC has been charged with imposing excessive and overpriced hazard insurance on homeowners to procure a hidden and unwarranted profit. While force placing homeowner’s insurance on homeowners whose policies have lapsed is not illegal in and of itself, HSBC has been accused of inflating the cost of that insurance nearly 400% to the financial benefit of the bank and its subsidiaries, Assurant Inc and Tracksure Insurance Agency Inc, who have also been named as defendants in the suit.
If you are a property owner who was forced to pay for an overpriced, unnecessary or otherwise excessive insurance policy, you may have legal recourse to recover monetary damages, including premiums paid out of this coverage.
It is not uncommon for lenders to require borrowers whose policies have expired to carry hazard insurance. This is done fairly regularly to protect creditors from situations in which an uninsured homeowner’s property is damaged. While it is legal for banks to purchase and force placed property insurance at the homeowner’s expense, it has been alleged that banks are purchasing coverage costing up to 10 times as much as a borrower purchased policy. HSBC has been accused of making a hidden profit from the inflated cost of insurance and receiving kickbacks from its subsidiaries, which could be considered illegal under a federal law known as the Real Estate Settlement Procedures Act (RESPA). By abusing its authority in this manner, HSBC creates unnecessary financial hardships on clients and families who may already be burdened with economic struggles, according to allegations.
“Force placing” occurs when a lender legally purchases insurance on behalf of a borrower who either does not have insurance or whose coverage has expired. It is illegal, however, for a bank to overcharge its clients to procure hidden and unwarranted funds for itself and its subsidiaries. Recently, several well-established banks, including HSBC, have been accused of abusing their authority and profiting from inflated insurance prices.