RIVERSIDE, Calif. (CN) - A class action claims that Wells Fargo Bank and American Security Insurance Co. "overinsure" lender-placed homeowners insurance, to their profit and at homebuyers' expense.
According to the Superior Court complaint: "The use of lender-placed insurance is generally a legitimate practice when a homeowner is unable, or simply fails, to purchase homeowners insurance to protect their homes. However, defendants have found a way to profit from their lender-placed insurance program. Defendants have a pattern and practice of purchasing lender placed insurance with policy limits which exceed the limits necessary to cover the structure. Defendants know this because defendants have in their possession the prior policy limits for the property. Defendants falsely represent to consumers that the limits of the lender placed insurance is equal to the consumers' prior chosen insurance when it is not.
"Plaintiff alleges that defendants' lender placed insurance practice are unlawful, unfair and deceptive."
The class is represented by David Parisi with Parisi & Havens of Sherman Oaks.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.