Thousands of Mass. homeowners refunded for improper insurance charges

“Our investigation found that this insurance company was charging consumers for costly and duplicative coverage,” Attorney General Maura Healey said in the statement. Jessica Rinaldi/Globe Staff

More than 4,500 Massachusetts homeowners received settlement checks totaling $6.3 million last week following an audit on property insurance practices, Attorney General Maura Healey’s office said in a statement Friday.

The payout follows an investigation into unnecessary charges billed to homeowners on their force-placed insurance policies by the Assurant Inc. subsidiary American Security Insurance Company.

“Our investigation found that this insurance company was charging consumers for costly and duplicative coverage,” Healey said in the statement. “As a result of our audit, 4,500 homeowners will be getting a check in the mail after being forced to pay for products they did not need.”

“Assurant has cooperated with the Attorney General’s inquiry and is pleased to have reached a resolution,” Assurant spokesman John M. Moran said in an e-mail.

Force-placed insurance is bought by mortgage servicers on behalf of borrowers and is intended for homeowners who fail to maintain adequate insurance coverage on a mortgaged property. However, borrowers included in the settlement were improperly forced to purchase force-placed insurance from Assurant or were overcharged for it after they were sold more expensive commercial rather than less expensive residential policies, Healey’s office said.

Mortgage servicers can hire insurers like Assurant to make sure homeowners maintain adequate coverage on mortgaged properties, and to issue force-placed policies if such coverage is not in place. Force-placed premiums can be two to three times as expensive as standard homeowners’ insurance policies, and provide limited coverage, Healey’s office said.

Another Assurant subsidiary was involved in a similar investigation and settlement payout last year. London’s HSBC Holdings PLC paid out $2.7 million to homeowners and $1.4 million to the state for receiving kickbacks from Assurant for sending homeowners requiring a force-placed policy its way.

Healey also audited QBE Insurance for similar reasons last year, resulting in a potential payout of $1 million to state homeowners and $375,000 to the state. And earlier this year, Healey sued Ocwen Loan Servicing LLC for its force-placed insurance practices and other borrowing and insurance violations.