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Court gives initial OK to Wells Fargo's $393.5M settlement over auto insurance

The U.S. District Court for the Central District of California has granted preliminary approval and class certification to a settlement to resolve claims that Wells Fargo & Co. and unit Wells Fargo Bank NA, along with National General Holdings Corp. and unit National General Insurance Co. forced borrowers to pay for "unnecessary and unwanted" auto insurance.

The defendants agreed to pay at least $393.5 million to the complainants and members of the settlement class, plus fees and costs of attorneys.

Also, National General has to pay $7.5 million and Wells Fargo has to pay an additional $1 million to compensate the members of the settlement class, who are otherwise not receiving any payment under the settlement allocation plan. Under the terms of the settlement, Wells Fargo Bank and National General are also required to pay up to $36 million in attorneys' fees for the borrower class and up to $500,000 in litigation expenses.

The court has scheduled a settlement fairness hearing in October to review the fees before granting final approval of the settlement.