Why Is My Insurance Claim Check Made Out to Me & My Mortgage Company?

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When you have a mortgage on a home, you may think of the house as yours, but your mortgage company also has a substantial interest in your property.  Your mortgage holder requires you to carry insurance on the property.  In fact, your mortgage company is listed on your homeowner’s insurance policy as the lineholder.  If your home is damaged, your insurance company will issue a check to pay for repairs, but the check will be made out to both you and your mortgage company.  You’ll need the cooperation of your mortgage company in order to cash the check and get the money for repairs.

The Check

The insurance company issues payment to everyone who has a financial interest in the property.  If you’re married or own your own home with a partner, both of your names will be on the check.  This is standard industry practice.  Your mortgage company will also be listed on the check.  Your bank won’t cash the check without the signature of everyone involved.  You’ll need to endorse the check and send it to your mortgage company.

Escrow Account

The mortgage company will cash the check and deposit the money in an escrow account.  It will issue payment in increments to fund repairs, but it won’t pay out all the funds until it is satisfied that all repairs have been made to its satisfaction.  You may be familiar with this set up if you have ever built a house.  The construction lender paid out construction loan funds in increments to pay the various subcontractors who worked on the home.  During rebuilding and repairs, you’ll go through the same process.

Getting the Money You Need

Since you’ll need the money to pay contractors to get started on the repairs to your home, you’ll need to submit a request to your mortgage company for money to make the initial deposit your contractors require.  This is often 50 percent of the total cost of repairs.  Gather repair estimates from the contractors and submit these to your mortgage company.  It will cut a check for the total and you can distribute the funds to the various contractors to get repairs underway.  When the work is finished or nearly finished, the mortgage holder will dispense the rest of the money to pay for the work.  Your mortgage company may require an inspection to verify that the work was done properly before it will make the final payment. 

Personal Property Versus Structure

Your mortgage company only has an interest in the physical structure of your home.  It’s possible that the same event that has damaged the structure also damaged your personal property, such as your furniture.  Some insurance companies will issue a separate check made out only to you to cover the cost of replacing personal property.  Other insurers will issue one check for total damages.  In this case, you should request your mortgage company issue you a check for 100 percent of the amount of the settlement that is supposed to cover the personal property insurance payment.

Insurance in Washington County, WI can be provided to you by R. S. Semler & Associates Insurance, Inc. after a brief consultation with us.  We are able to tailor policies specific to your unique situation because we represent numerous insurance companies and have local licensed agents on staff in Hartford, WI available to help you when you need it most.  You can learn more about us and insurance at www.rssemler.com or call us at 800-414-5875.