The banking giant, along with perennial defendant Assurant, is being sued in federal court over an alleged force-placed insurance kickback scheme, in which plaintiffs claim that Assurant artificially inflated premiums on insurance in order to pay kickbacks to Wells Fargo.
Three plaintiffs, suing Wells Fargo and Assurant individually “and on behalf of all others similarly situated,” claim that when their homeowner policies were not renewed, Wells Fargo force-placed policies which cost significantly more than their previous insurance – in some cases more than twice as much – covered only the structure of the home and protected only Wells Fargo. They further allege that Wells Fargo received a commission for the more expensive policies.
Wells Fargo and Assurant dispute the allegations and moved to dismiss the charges, but the motion was denied by U.S. District Court Judge David R. Herndon.
This isn’t Assurant’s first rodeo when it comes to allegations of dodgy insurance practices. In April, the insurer, along with embattled servicer Ocwen Financial, agreed to pay $140 million to settle similar claims.
Wells Fargo is once again in hot water, this time over force-placed insurance.