Home Insurance Info
Guide to home insurance
Here are the basics of home insurance you have to know before you start searching for a policy.
more info What does a home insurance policy cover?
You should definitely know what your home insurance policy covers before buying it.
more info Affordable Home Insurance - Savings Tips
Review your policy
Improve the safety of your house
Combine different types of insurance
Shop around for a good policy in the first place
Guide to home insurance
Here are the basics of home insurance you have to know before you start searching for a policy.
more info What does a home insurance policy cover?
You should definitely know what your home insurance policy covers before buying it.
more info Affordable Home Insurance - Savings Tips
Review your policy
Improve the safety of your house
Combine different types of insurance
Shop around for a good policy in the first place
Cheap home insurance is the opposite of force-placed insurance
There’s a major battle going on right now for hearts and minds. On one side all those who want to defend Wall Street line up. On the other, there’s the Occupy movement claiming to represent the 99% that’s suffered at the hands of Wall Street. The problem for the defenders is the main reason for the recession was the behavior of the banks and financial institutions. The liberals generally and the Democrats who represent them argue this justifies more regulation. They assert a failure of free-market capitalism and want to move back in time to a much higher level of supervision and regulation to prevent this from happening again. The Libertarians and the GOP who include them in its broad church argue the reason for Wall Street’s failure was the presence of too much regulation. They claim we would all still be sleeping peacefully in our beds if only the Democrats had not introduced all those limits on free-market capitalism.
For these purposes, it does not really matter which side of the debate is right. All we need say is the housing bubble burst and this unleashed a wave of foreclosures that continues to roil the country. Some states like California are bracing themselves for a further rise of the number of evictions by the banks. It seems these bastions of fairness have overcome the problems of robosigning and can now prove title to all the mortgaged homes. With high numbers of owners four or more months in arrears, the banks continue in their reluctance to write off any of the capital owing. As more empty properties come on to the market, this will further depress prices. Everyone loses.
However, one feature of this process is under new investigation. Starting at the top of the tree, Chase, Wells Fargo and Bank of America are currently accused of fraud in their use of the force-placed insurance provision in all mortgages. In theory, this is a reasonable term. If the home owner defaults and fails to insure the property, the mortgagee should have the right to place its own cover and recover the premiums paid from the owner. This protects the lender’s security for the loan. Unfortunately, it seems the banks have been steering borrowers into significantly overpriced policies. There are reports of some force-placed policies being ten times more expensive than the policies held by the owners. The investigation is focussing on the lender’s use of affiliated insurance companies, thereby earning kickback commissions. If this investigation does prove fraud, it will mean both a fine and an obligation to refund the premiums charged to the home owners. Even if the investigation fails to establish actual fraud, the regulators could still order refunds in all cases where the premium rate for the force-placed policy is unusually high.
The moral of this story is that, wherever possible, you should try to keep up the payment on your home insurance policy. This avoids the threat of a force-placed policy. You cannot rely on regulators to investigate, let alone recover money from the insurers on your behalf. That said, it’s actually pleasing to see the regulators more prepared to take on the insurers. While this may not produce cheap home insurance in the future, it should keep the insurers slightly more honest.
There’s a major battle going on right now for hearts and minds. On one side all those who want to defend Wall Street line up. On the other, there’s the Occupy movement claiming to represent the 99% that’s suffered at the hands of Wall Street. The problem for the defenders is the main reason for the recession was the behavior of the banks and financial institutions. The liberals generally and the Democrats who represent them argue this justifies more regulation. They assert a failure of free-market capitalism and want to move back in time to a much higher level of supervision and regulation to prevent this from happening again. The Libertarians and the GOP who include them in its broad church argue the reason for Wall Street’s failure was the presence of too much regulation. They claim we would all still be sleeping peacefully in our beds if only the Democrats had not introduced all those limits on free-market capitalism.
For these purposes, it does not really matter which side of the debate is right. All we need say is the housing bubble burst and this unleashed a wave of foreclosures that continues to roil the country. Some states like California are bracing themselves for a further rise of the number of evictions by the banks. It seems these bastions of fairness have overcome the problems of robosigning and can now prove title to all the mortgaged homes. With high numbers of owners four or more months in arrears, the banks continue in their reluctance to write off any of the capital owing. As more empty properties come on to the market, this will further depress prices. Everyone loses.
However, one feature of this process is under new investigation. Starting at the top of the tree, Chase, Wells Fargo and Bank of America are currently accused of fraud in their use of the force-placed insurance provision in all mortgages. In theory, this is a reasonable term. If the home owner defaults and fails to insure the property, the mortgagee should have the right to place its own cover and recover the premiums paid from the owner. This protects the lender’s security for the loan. Unfortunately, it seems the banks have been steering borrowers into significantly overpriced policies. There are reports of some force-placed policies being ten times more expensive than the policies held by the owners. The investigation is focussing on the lender’s use of affiliated insurance companies, thereby earning kickback commissions. If this investigation does prove fraud, it will mean both a fine and an obligation to refund the premiums charged to the home owners. Even if the investigation fails to establish actual fraud, the regulators could still order refunds in all cases where the premium rate for the force-placed policy is unusually high.
The moral of this story is that, wherever possible, you should try to keep up the payment on your home insurance policy. This avoids the threat of a force-placed policy. You cannot rely on regulators to investigate, let alone recover money from the insurers on your behalf. That said, it’s actually pleasing to see the regulators more prepared to take on the insurers. While this may not produce cheap home insurance in the future, it should keep the insurers slightly more honest.
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