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Why Is Your Insurance Claim Check Payable To You And Your Bank Lender?

Why are insurance claim checks payable to you and your bank or lender?

Insurance Claim Check Payable to You and your bank lender | Huff InsuranceClaim Example: During the 50+ mile per hour winds, let’s picture your roof having wind damage that resulted in $25,000 in damage.  You go through the claims process and get it settled.  You get your insurance claim check from the company.  Then, when you look at the check, you see it is payable to you and your bank.

You may be looking at the claims check and wondering why your banks name on it.  

When you bought your home, you probably had to get a mortgage to help pay for the home.  This gives the mortgage company a significant financial interest in the well being of your home and property.  To protect their financial interest, the mortgage company is the listed as lienholder and loss payee on your home insurance policy.  Therefore, any checks paid out for claims from the insurance company will be payable to both the bank and you.

Why does the bank want to be listed on every claims check?

As stated above, the bank has a significant financial interest in your home.  Let’s use the wind damaged roof example above.  The bank wants to make sure that the repairs to the home will be made.  The bank does not want you to be tempted to use the $25,000 for anything else besides repairing the roof.

How do you get access to the needed money with the banks name on the check?

Depending on the size of the check and amount of damage, accessing the funds can be handled in different ways.  No matter which way it is handled, the bank or mortgage holder will have to sign off on the check.  This could be done in person if the bank has local branches.  If in person is not an option, you will need to contact your back to see what would be the best method.   They may request it be done by mail.

For smaller claims, the bank may be willing to just sign off on the check and trust that you will fix the issues.

For larger claims, they may want you to sign over the check for them to deposit into an escrow account.  From there, as the repair process moves along, they will authorize the release of funds to the contractor based on a set payment schedule.  This would include the initial deposit to get the job started.  Then subsequent payments during the scope of the project.  And ending with the final payment when the repairs are completed.  The bank may require inspections along the way and at the end to verify that the repairs are done as stated.

Contact Huff Insurance with any questions

If you have any questions on your claims check, please give us a call at 410-647-1111.

Huff Insurance is a full service independent insurance agent licensed to do business in MD, PA, VA, DE, WV and DC


**Claims procedures vary by state and by company.  Please check with your insurance company to see what their processes are for handling claims checks.




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