(Image by Donna Bruno ©Dennis J. Wall)
Cheryl Haley died before Hurricane Ida struck her home in August. Her husband, John, reported the loss to the insurance carrier in December. During the next six months, from December to May, the carrier went out to inspect the Haley property and came back with a much lower figure for the damage than John had in mind.
Finally, in May, John sued the insurance company for the loss.
The following August, the insurance company told the court that John had no rights in its policy (except to pay the premium, of course).
John paid the premiums on the policy, but it was a special policy. It was written to protect the mortgage that the Haleys had given to their bank. The bank assigned the policy to what is called a mortgage servicer, which is just like it sounds. The company servicing the Haleys' mortgage was Select Portfolio and the company which issued the insurance policy is its frequent partner, American Security Insurance Company or ASIC.
Unfortunately for John, the court agreed with the insurance company and held that John has no rights to payment for his house under the policy that insures his house. Although it was supposedly written to protect the mortgage, the policy was issued in the ordinary way and covered the property, not just the mortgage.
That did not change the judge's ruling that John has no interest in getting payment for the damages to his house under the ASIC policy. That interest belongs only to Select Portfolio, said the judge. Case dismissed.
Epilogue: The insurance policy that ASIC issued is not a homeowner's policy even though it insured the Haleys' home. John Haley was forced to pay the premiums because he supposedly did not keep insurance on the property in effect after his wife's death, so their lender at the time forced the insurance on them. However, the policy for which John Haley was forced to pay a premium recognized only Select Portfolio as the one to get any proceeds paid under the policy.
It is an amazing thing in the United States in 2022, forcing people to pay without getting any benefit for it. The last time this happened and the courts went along with it was over 160 years ago, and the people were enslaved. Now it's every homeowner with a mortgage that allows lenders to force homeowners to bear the burden of insurance premiums for insurance which only benefits the lenders.
The case is Haley v. American Security Insurance Co., Eastern District of Louisiana Case No. 22-1728. The case was closed on November 30, 2022. The Haley case is only one, sadly ordinary story among many similar force-placed insurance cases. See the book published by the American Bar Association on the matter of premiums for insurance force-placed by lenders to protect their mortgage loans, DENNIS J. WALL, LENDER FORCE-PLACED INSURANCE PRACTICES.