If you have a mortgage on your home when filing an insurance claim, the insurance company is required, by the terms of the policy, to make the check payable to you and any lienholders on the property.
Why?
Because the mortgage company has an interest in your home, and they want to ensure that their investment in your property isn’t jeopardized by damage to the property.
So what do you do with this check?
The process is typically determined by the value of your claim check and will vary from lender to lender. Generally, if the insurance claim check is less than $15,000-$20,000 the mortgage company will request that you endorse the check for deposit only and then mail the check to the mortgage company’s claim processing department. Upon receipt of the check the mortgage company will also endorse the check for deposit only and will typically overnight the check to you so you can deposit the check and get the repairs underway.
Depending on the size of your insurance claim or the type of damage the property sustained, your mortgage company may require some type of confirmation that the repairs were completed in a timely manner. Failure to provide this documentation can violate the terms of your mortgage. It’s super important that you give them what they ask for.
What if it’s a large claim?
If your insurance claim check is greater than $15,000-$20,000 dollars, the mortgage company’s process is still the same as previously mentioned, however, your mortgage company may hold the money in escrow and request that any bills relating to the repairs of your home be sent to them directly. The mortgage company will then pay the contractor(s) on your behalf. The mortgage company is simply looking to ensure that the home is in the same, or better, condition that it was before your claim event occurred so that the value of your home remains intact.
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