Force Placed Insurance in Florida

Unless you have been in the situation, maybe you don’t even know what “force placed” insurance is. Force placed insurance, sometimes called “lender placed”, is when a lender or creditor takes out insurance on an asset that doesn’t have insurance, and the costs of the insurance are passed on to the customer, hence why it is “forced”. It is mostly used in property insurance, including homes and cars. Therefore, when a person buys a car or a house with a mortgage or a loan, the creditor, usually a bank, requires that the buyer carry insurance on that property. If the buyer doesn’t get his or her own insurance, the creditor obtains the insurance to protect their investment.

As a Florida property insurance attorney, I have been following the force placed insurance issue in our state. I recently saw an article on this very topic.This past summer in August, Florida Insurance Commissioner, Kevin McCarty, rejected the force placed insurer QBE’s proposed rates. Around the same time, he announced that state regulators were going to investigate the cost of force placed premiums and the relationship between insurance companies and mortgage holding banks that send force placed business to the insurance companies.

Now, QBE is proposing to cut its force placed insurance rates by 19 percent. A portion of those cuts will be coming from commissions the insurer pays to the banks and mortgage lenders. This could be interesting news, considering that QBE is the second largest force placed insurance company in the country. But it might not be enough, considering the substantially larger rate reductions required by other states. California regulators recently imposed a 30.5 percent cut on Assurant, and mortgage giant Fannie Mae is asking for a 30 to 40 percent reduction. And industry experts, including one cited by Commissioner McCarty, claim these insurance companies could cut rates in half and still make a substantial profit.

This newest rate offer by QBE’s subsidiary, Praetorian, has not been accepted by Florida regulators yet. A spokesperson for the Office of Insurance Regulation said, “We have not been in ‘negotiations’ with Praetorian. However, there were numerous discussions with the company on what information needed to be provided in their filing.” Florida is also waiting for Assurant, the company whose rates California cut by more than 30 percent, to file proposed rates with the state, as well.

Regardless, a Florida insurance attorney can assist you in an insurance claim action. Under Florida law, if you succeed in your case, the attorney’s fees will automatically be the responsibility of the insurance company. This means that no matter how big or small your claim, if you win your case, you get to keep the entire award and the insurance company will pay all of your lawyer’s fees. So if you are having difficulties, it is worth it to discuss your case with an experienced attorney and see if there is a way to move forward.

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