The state of Minnesota announced earlier this week that it is fining American Modern Insurance Group $1 million for overcharging Minnesota residents for force-placed insurance.
Force-placed insurance is also known as lender-placed insurance. When a homeowner needs insurance, but is unresponsive, the lender can reasonable place a policy and charge the property owner.
According to an announcement from the Minnesota Commerce Department, American Modern Insurance Group will also be required to cut its insurance rates by 43% and provide refunds to the affected homeowners.
“The Commerce Department investigation found that, for years, American Modern charged excessive rates to Minnesota homeowners who were forced to buy its policies,” said Minnesota Commerce Commissioner Mike Rothman, whose agency regulates the insurance industry. “This settlement will provide refunds to Minnesotans who were overcharged in the past, while protecting consumers against unfair and costly insurance practices in the future.”