Understanding the Basics After Receiving a Property Insurance Check
If your insurance company issued a check for property damage, you may have noticed something surprising: the check includes the mortgage company’s name alongside yours. That’s not a mistake. It’s a standard part of how lenders protect their financial interest in your home.
Let’s break it all down. We’ll explain what it means, why it happens, and what you need to do next.
Your Mortgage Company Has a Stake in the Property
When you signed your mortgage, you agreed to maintain homeowners’ insurance to protect your home and your lender’s interest. If a fire, storm, or other disaster damages your home, the insurance proceeds protect the lender just as much as you. Therefore, the insurance company names the mortgage company as an additional payee.
How the Mortgage Clause Works
Most insurance policies include a mortgagee clause stating that the insurance company must name the mortgage holder on the check. This clause also allows the mortgage company to control how the funds are used, especially when the damage is significant.
If you suffer property damage, your insurance provider issues you and your mortgage company a check. The mortgage company then holds the funds in escrow and releases them in stages, typically based on inspections or proof of completed repairs.
Why the Process Can Feel Delayed or Frustrating
Many homeowners expect to cash the insurance check immediately. But because the lender shares ownership of the home, they want to ensure you spend the money on necessary repairs, not unrelated expenses. Unfortunately, some mortgage companies delay inspections, request repetitive documents, or communicate poorly. That’s where having a lawyer can help.
What If Your Mortgage Is Paid Off?
If you’ve fully paid your mortgage, the insurance company will only issue the check in your name. You can deposit and use the funds without lender approval. However, even if no mortgage remains, it’s essential to document all repairs and retain receipts in case of future claims.
How to Endorse and Process a Check with the Mortgage Company
If your check includes your mortgage company, you will likely need to follow these steps to access the funds:
1. Contact the Mortgage Company Immediately
Contact your lender’s loss draft department, which handles insurance claims. They will provide specific instructions and required documentation.
2. Endorse the Check Properly
You must sign the check and forward it to the lender for co-endorsement. Some mortgage companies require the check mailed or dropped off at a branch.
3. Submit Required Paperwork
Most lenders will ask for:
- A copy of the insurance adjuster’s report
- A repair estimate or a contractor’s proposal
- A signed contractor agreement
- Photos of the damage
- A W-9 form from your contractor
4. Request a Disbursement Plan
Depending on the amount, the lender may hold the funds in escrow and release them in portions:
- First disbursement: Typically, 33–50% up front to begin work
- Second disbursement: After partial inspection of completed repairs
- Final disbursement: Once all work is complete and verified
What If the Mortgage Company Won’t Release the Funds?
Understanding the most common reasons lenders withhold insurance proceeds can help homeowners avoid preventable delays:
- Incomplete Documentation: The mortgage servicer usually requires a complete claim package, including the insurance check, adjuster’s report, contractor estimates, and a signed W-9 form.
- Delinquent Loan Status: The lender may retain the full amount if the borrower is behind on mortgage payments or in foreclosure.
- Major Property Damage: In cases involving substantial damage, the mortgage company may want to inspect the property and release funds in installments as repairs are completed.
- No Proof of Repairs: Lenders need assurance that repairs are being made. Without invoices, photos, or permits, they may withhold disbursements.
- Internal Delays: Some lenders simply operate inefficiently. Lost paperwork, understaffed departments, or outdated procedures can delay the process.
Tips for Smoother Processing
Contact your mortgage company as soon as you file an insurance claim. Ask about their specific requirements, processing times, and documentation needs. Having this information upfront can prevent delays later.
Keep Detailed Records
Document everything related to the damage and repairs:
- Photos of damage before and after repairs
- All estimates and contracts
- Receipts for materials and labor
- Communication with insurance and mortgage companies
Understand Your Policy
Review your mortgage documents to understand your lender’s specific requirements regarding insurance claims. Some companies have more streamlined processes than others.
Work with Experienced Contractors
Choose contractors familiar with insurance work and mortgage company requirements. They can often help navigate the documentation process and may be willing to work with delayed payment schedules.
Why It Still Applies When You Use an Insurance Claim Lawyer
Even with an insurance claim lawyer involved in your 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 our expert insurance claim lawyers 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. Our job is to advocate for you and ensure you receive a fair settlement, but we cannot alter the fundamental terms of your mortgage agreement.
Insurance Claim Lawyers Understand Mortgage and Insurance Contracts
Most homeowners are unfamiliar with the fine print in their mortgage agreements and insurance policies. Our insurance claim lawyers understand the legal obligations of all parties: you, the mortgage lender, and the insurance company, and can ensure everyone complies with the terms.
Take Control of Your Insurance Funds
Although including a mortgage company on an insurance claim check may feel frustrating, it’s part of the legal framework designed to protect both the homeowner and the lender. Understanding the process and communicating effectively can minimize delays and restore your home quickly and correctly.
If you’re unsure about how to proceed or encounter any difficulties, consider contacting our expert 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.