If your mortgage company requires you to have insurance and you refuse, or let your policy lapse, then they will force insurance on you. They will pay for the coverage and bill you back.
This is called mortgage impairment coverage. It is basic, and it is expensive. You have no choice over what is covered, and it generally only covers the interest of the mortgagee.
Can you trust them? Well, not always.
Check this out:
Wells Fargo and QBE Insurance company agree on a 19.3 million dollar settlement. Many of these are condo owners.
Wells Fargo and QBE have agreed to settle a lawsuit dealing with force-placed insurance policies in Florida involving 24,000 borrowers.
The companies will pay $19.3 million to compensate the borrowers.
The settlement in federal district court in Miami deals with claims that the bank and QBE overcharged homeowners in Florida for force-placed insurance. The class-action lawsuit is one of three filed in connection with alleged overcharging of homeowners for force-placed insurance, which became a huge business in the wake of the housing bust.
The two others were filed in New York, according to industry officials. Best estimates are that the business has $2.6 billion in annual written premiums.