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Illegal Lending & Mortgage Practices

Force Placed Auto Insurance

Many auto loans require borrowers to have auto insurance. If a borrower does not have insurance, the lender may impose insurance and charge the borrower the premium. This is called force placed auto insurance. However, state and federal laws regulate the imposition of force placed auto insurance, including requiring lenders to notify borrowers of any such insurance. If you believe your auto lender has force-placed you with unnecessary or expensive insurance, our consumer protection attorneys may be able to help.

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Force Placed Auto Insurance Details

In order to obtain a loan to purchase a vehicle, a borrower typically must provide proof of insurance. In the event you do not have insurance or experience a lapse in coverage, your lender will frequently “force place” insurance on the vehicle by purchasing an insurance policy and applying the cost of the premium to your account balance.

Unfortunately, force-placed insurance is often unnecessary, overly-expensive, or otherwise undesirable to the consumer. Every year, thousands of car buyers are forced to purchase expensive and unnecessary insurance as part of the financing process for their vehicle.

If your lender used these or other unsavory business tactics when force-placing your vehicle with insurance, please contact our consumer protection team to see if you have a claim. In certain cases, you may be entitled to monetary damages due to the force placed insurance levied by your auto lender.

Examples of Illegal Force Placed Auto Insurance

You may be entitled to monetary damages if your auto lender:

Purchased exorbitant insurance coverage for your vehicle.

  • Received significant kickbacks 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.

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