Practice Areas

Consumer Rights

Force Placed Auto Insurance

When you obtain financing to purchase an automobile, you likely make a contractual agreement to maintain insurance on the vehicle that serves as collateral for the loan.  In the event you do not have insurance or experience a lapse in coverage, lenders frequently “force place” insurance on the vehicle by purchasing an insurance policy and applying the cost of the premium to your account balance.

Although auto lenders justify this practice on the grounds that it is necessary to protect their interest in the vehicle, many consumers have reported abuses with this practice.  For example, some vehicle owners have reported that their lender:

Kai Richter

Consumer Law Attorney
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  • Purchased exorbitant insurance coverage with a yearly premium in excess of 15x the vehicle’s purchase price;
  • Received significant kick-backs in the form of commissions or administrative expense reimbursements from the insurer for force-placing auto insurance coverage;
  • Failed to accurately refund charged premiums back to the date of force-placed insurance cancellation when private insurance was purchased;
  • Used classified and biased premium refund calculation methods – sometimes called “accelerated method” or “Rule of 78s” – without disclosure.

Nichols Kaster understands how unfair and intimidating it can be to take on a large corporation on your own, and we would like to help.  Please contact us if you feel that you are a victim of deceptive or misleading force-placed auto insurance practices.