Understanding the Basics After Receiving a Property Insurance Check
If you’ve recently filed a homeowners insurance claim and received a check for damages, you might have been surprised to see the name of your mortgage company included alongside yours. This is a common practice, but it often raises questions for homeowners unfamiliar with the claims process. So, why is the mortgage company listed on your insurance check, and what does it mean for you?
The Role of the Mortgage Company
When you mortgage your home, the mortgage company or lender technically has a financial interest in your property. Until you fully pay off your mortgage, the home is collateral for the loan. Therefore, if your home is damaged, the lender wants to ensure the necessary repairs are made to maintain the property’s value.
Including the mortgage company’s name on the insurance check allows the lender to oversee and ensure the funds are used to repair or restore the property. This is especially important for the lender since the home is their security for the loan.
Mortgage Companies and Homeowners Insurance
Most mortgage agreements require homeowners to carry adequate insurance coverage on the property. If a covered loss occurs, the insurance policy pays for the repairs, but the mortgage company also has a say in managing the insurance payout. In essence, the lender is protecting its investment in your home by having some control over how the insurance proceeds are used.
Why Are They Named on the Check?
- To Ensure Repairs Are Made: The mortgage company wants to guarantee that the insurance money is used to repair the property, ensuring it maintains its value. Including them on the check gives them oversight.
- To Manage Large Sums: If the claim amount is substantial, the mortgage company may hold the funds in an escrow account and disburse them as repairs are completed. This ensures the money is not misused and the repairs progress according to plan.
- To Protect Their Interest in the Property: Since the mortgage company holds a lien on your home, they want to protect their financial interest. Major property damage can reduce the home’s value, impacting the loan’s security.
Why It Still Applies When You Use a Lawyer
Even when a lawyer is involved in your insurance claim process, including the mortgage company’s name on the check remains necessary. Here’s why:
- Legal and Contractual Obligations: The mortgage company’s rights and obligations are outlined in the contract, which remains unchanged regardless of legal representation. The insurance company must comply with these terms when issuing the settlement check.
- Lender’s Rights: Using a lawyer will expedite and maximize your property insurance claim, but it does not negate the lender’s right to be involved in the disbursement of funds. The lawyer’s role is to advocate for you and ensure you receive a fair settlement, but they cannot alter the fundamental terms of your mortgage agreement.
How Long Will It Take to Get the Funds Released?
Getting the funds released can vary depending on your mortgage company’s policies. Typically, the company will require:
- A signed contractor agreement
- An inspection report or photos of the damage
- Proof of completed work in stages
While some companies move quickly, others may have more detailed review processes. It’s important to communicate with your mortgage company and contractor to ensure that everyone understands the timeline.
4 Steps to Take When You Receive the Check for Your Claim
If you find that your insurance check includes your mortgage company’s name, here’s what you should do:
- Contact Your Mortgage Company: Contact your mortgage company as soon as you receive the check. Inform them of the situation and ask about their process for endorsing and releasing the funds. Each lender may have different procedures, so following their specific instructions is essential.
- Endorsement and Disbursement: After receiving the check, your lawyer will guide you through endorsing it. The check will usually need to be sent to the mortgage company for their endorsement before being returned to you or directly to the contractors handling the repairs.
- Provide Necessary Documentation: Be prepared to submit documentation such as repair estimates, insurance claim details, and contractor information. The mortgage company may require this information to verify that the funds will be used appropriately for property repairs.
- Complete the Repairs and Provide Proof: After the repairs are completed, you might need to provide proof of completion, such as receipts, invoices, or inspection reports. This ensures that the mortgage company can verify that the insurance funds were used as intended. If the initial check did not cover all repair costs, the mortgage company might release additional funds upon receiving proof of the completed work.
The Importance of Speaking with an Insurance Lawyer
Dealing with insurance companies and mortgage lenders simultaneously can complicate a stressful situation. Our experienced insurance claim lawyers can help ensure that your rights are protected and that you receive the full compensation you’re entitled to. We can also assist in speeding up the claims process, particularly if there are disputes with the insurance company or your mortgage lender regarding the release of funds.
Conclusion
Even when you’ve used a lawyer, receiving an insurance check with your mortgage company’s name on it is standard practice. This process ensures that the lender’s financial interest in the property is protected and that the insurance money is used appropriately for necessary repairs. By understanding the role of the mortgage company and following the necessary procedures, you can ensure that the insurance payout is used to repair your property efficiently and without unnecessary delays.
If you’re unsure about how to proceed or encounter any difficulties, consider contacting our Florida insurance claim lawyers, who can provide expert guidance and help you get the repairs done as quickly as possible. Call us at 1-800-451-6786 or fill out our online contact form.