Who Gets the Claim Payment?
The insurance company can issue a settlement check after accepting your claim and reviewing the adjuster ’s documentation. So, how are homeowners insurance claims paid? Your settlement can be issued by:
But there’s a catch: The insurance company may not send the payment to you directly. Instead, they may send the settlement to your contractor or your mortgage lender to oversee the payout and make sure necessary repairs are made.
Settlement amounts sent directly to you can be a check or electronic transfer, such as a direct deposit.
If your home is uninhabitable, you may have a temporary address. Give your insurer your updated address and contact information.
Also, if you cannot live in the home, you may receive a check for additional living expenses (ALE), including rent, eating out, and extra transportation costs. Checks for ALE should be made directly to you.
Your insurance provider may send payment to your contractor. The contractor or their management company may ask you to sign a direction to pay form to allow your insurance company to issue funds.
This form is a legal form. Read it carefully to make sure you fully understand what you’re signing.
Before the insurance company sends a final payment, check to ensure you’re satisfied with the work.
Your Mortgage Lender
If you have a mortgage on your home, your mortgage company may receive the settlement amount.
That’s because your mortgage lender is likely a “named insured” on your home insurance policy. As a named insured, they can protect their financial interest by overseeing proper repairs if a claim is filed.
Every lender is different. There may be a specific process to follow or a set of documents to complete to get your mortgage company to release the insurance proceeds. For example, some mortgage holders will set up an escrow account to hold the funds until repairs are completed.
Contact your lender to ask about an “ insurance claim check packet” to help make the process smoother.