While you may be none too happy that something happened to your happy home, you should be delighted if you had enough insurance to cover most of the damage. But when does the money show up? This isn’t like a typical refund transaction. If you want to make sure your claim is paid fully and as soon as possible, take a look at how the payment process for home insurance claims works.
Who gets paid?
A claim check payable to the sole owner of the house comes to you to cover personal contents that are part of your claim. But if you have a mortgage, the part of the claim check for repairs may be made out to both you and the lender and you’ll have to coordinate getting it cashed. This isn’t anything sketchy. Ordinarily, to grant you a mortgage in the first place, a lender will typically demand they be named on your home insurance policy and “party to” the payments. Your lender may open an escrow account for the claim check funds and use it to pay repairs as each is complete.
Contractors sometimes request to be paid directly by the insurer, so they may get their own check. So might a condo management company that has a legal interest in making sure insurance payoffs go to repairing or replacing damaged property. But the check for additional living expenses, or ALE, will come to you, and you should make certain the insurer did not accidentally make it out to both you and the mortgage company.
The first check might not be final
Don’t panic if you get a claim check and it looks way lower than you thought. Usually, your first payment is an advance of the total settlement. You may also receive two separate checks, one for structural damage and another for personal belongings. And if you were covered for flood damage, that’s yet another check. When the full amount arrives, you’ll probably be asked to sign a form stating this particular claim process is complete.