Residential Property Claims Guide

9 How the Payment Process Works The first check you receive from the insurance company is often an advance, not a final payment. If you’re offered an on-the-spot settlement, you can accept a check at that time. However, be sure that you understand what the check does and does not cover. Be wary of initial settlement offers that are represented as full settlements and require a release of further liability. Under most circumstances, if additional damage is discovered later, you can “reopen” the claim and request additional compensation. As with your initial claim, you must notify your insurer immediately upon the discovery of additional damage. When both the structure of your home and your personal belongings are damaged, you generally receive two separate checks from your insurance company. You should also receive a separate check covering your additional living expenses. • Structure If your home is mortgaged, the check for home repairs will generally be made out to you and the mortgage lender. As a condition of granting a mortgage, lenders usually require that they are named in the homeowners policy and that they are a party to any insurance payments related to the structure. The lender gets equal rights to the insurance check to ensure that the necessary repairs are made to the property in which it has a significant financial interest. This means that the mortgage company or bank will have to endorse the check. Lenders generally put the money in an escrow account and release the funds to the policyholder as the work is completed. You should show the mortgage lender your contractor’s bid and let them know how much the contractor wants up-front to begin the job. Your mortgage company may want to inspect the finished job before releasing the funds for final payment.