When a home has a mortgage, the Consumer Financial Protection Bureau says the insurance company generally writes the settlement check to both you and your mortgage servicer. Your servicer has its own steps for releasing the money. Ask for them in writing, then ask each contractor whether the payment schedule in the bid can follow them.
Why is the insurance check made out to me and my mortgage company?
The CFPB says a home insurance company generally pays a settlement with a check made out to both you and your mortgage servicer or lender, and that most mortgage agreements require this to protect the lender's interest. Read your loan documents and your policy, or ask your servicer and your insurer, to see what applies to you.
Here is the CFPB's wording:
Your homeowner’s insurance company generally pays your settlement with a check made out to both you and your mortgage servicer or lender. Most mortgage agreements require this to protect the lender’s interest.
Consumer Financial Protection Bureau, “How do home insurance companies pay out claims?”
A state insurance department explains the same arrangement from the loan side. The New Jersey Department of Banking and Insurance says claim checks are likely to be made payable jointly to the customer and the mortgagee, and that the mortgage holder “is listed as the loss payee on the insurance policy, and is included on the check because they have a secured interest in the property.” That page is written for New Jersey customers and carries a 2011 copyright date, so treat it as one explanation, not as a rule for your loan.
What does my mortgage servicer do with the check?
It depends on the servicer, so ask. The CFPB says the servicer typically releases part of the money before work begins so you can hire a contractor, more as the work progresses, and the rest once the job is finished and the home passes inspection. Ask your servicer for its written procedure.
The Office of the Comptroller of the Currency, a federal regulator of national banks, says banks have different policies and procedures for releasing insurance claim funds. It adds that the loan documents signed at mortgage closing generally give the bank the authority to monitor the work and verify that repairs have been completed before sending funds. The New Jersey page says a mortgage holder may release funds in increments and may order inspections of the property.
Ask your servicer what steps to take with the check. The OCC says that once you receive the check, you should “notify your bank to determine what steps should be taken, including whether you should send the check to the bank.” The CFPB also notes that if you have a mortgage, you are still responsible for making your payments while your insurance claim is paid out.
Copy these questions for your servicer and add your own:
- Can you send me your written procedure for insurance claim checks?
- What are the steps for the check itself, such as signing and depositing it?
- Is the money released all at once or in stages, and what starts each release?
- Do you order an inspection, who pays for it, and how long does it take to schedule?
- What paperwork do you need from me and from the contractor before each release?
- Are released funds sent to me, to the contractor or to both?
- Who is my contact, and how long does each step take?
Write down the date, the name of the person you spoke with and what they said. Ask for the answers in writing when a phone call leaves anything unclear.
Should I ask my servicer about the money before I collect bids?
The CFPB says to check with your insurance company and your mortgage company or servicer about how and when insurance funds are distributed before you hire contractors. Asking for bids is a separate step from signing, so you can collect bids while you learn the servicer's steps. Read each contract in full before you sign.
Having the servicer's steps in hand first lets you hold each bid's payment terms up against them. For the order of steps from estimate to signed contract, see our guide to the steps after the adjuster's estimate. For giving every contractor the same written scope, see whether to show a contractor your insurance estimate.
How can the contractor's payment schedule follow my servicer's release schedule?
Ask each contractor, before you sign, whether the payment schedule in the bid can follow your servicer's release schedule. A contractor may be able to write the schedule that way. Give the contractor your servicer's written steps, and ask for the agreed schedule to appear in the contract itself.
A bid may split payment into a deposit, progress payments tied to stages of the work, and a final payment at completion. Your servicer may release money in stages too. Matching the two is a conversation between you, the contractor and the servicer, and your signed contract sets out when and how the contractor is paid.
If a contractor's schedule does not match your servicer's, you can ask for a different schedule, or compare a bid from another contractor.
What should I look for in the payment terms of a bid?
Look for four things in writing: the size of any deposit, what each progress payment is tied to, when the final payment is due, and what lien waiver the contractor provides. Ask the questions below, and write the answers next to each bid so the bids compare side by side.
| Payment term | Question to ask the contractor |
|---|---|
| Deposit | Is a deposit part of this bid, how large is it, and what does it pay for? |
| Progress payments | Which stage of the work starts each progress payment, and how is that stage confirmed? |
| Final payment | When is the final payment due, and what needs to be finished first? |
| Lien waiver | What lien waiver do you provide, when do I receive it, and what does it cover? |
| Price changes | What could change the price after I sign, and how would a change be written down? |
| Receipts | Can you give me a receipt for every payment? |
The CFPB's page on working with contractors after a disaster tells readers to record “A total price and a schedule for any payments”. It lists, as “Don’ts,” making any upfront payments without a signed contract, paying with cash, and making the final payment until the work is completed to your satisfaction. It lists, as “Do’s,” getting a receipt for all payments and keeping documentation.
To line the bids up item by item, use the roof bid comparison worksheet and add a row for each payment term above.
What should I ask about lien waivers?
Ask each contractor what lien waiver it provides, when you receive each one, and what each one covers. Ask for the answer in writing. For your state's rules on lien waivers, ask your state consumer protection office or an attorney before you pay.
The CFPB adds that if a contract is for a significant amount of money, you may want to have it reviewed by a lawyer. It also says to never sign a contract without carefully reading it, and that you can always walk away if you feel uncomfortable.
What if the contractor's bid is different from the insurer's estimate?
The bid and the insurer's estimate come from different people. A difference is a question to ask, not a verdict. How any insurance payment relates to the contract price is a question for your insurer and your policy. Our guide to a bid that is higher than the insurance estimate covers how to compare the two documents.
Where does Otter Quotes fit?
You provide a copy of your insurance estimate, and Otter Quotes creates a written scope of work for your project and sends it to multiple contractors. They compete online with bids on the same work, and you compare the bids side by side, next to reviews and licensing information. You sign online, with no salesperson in your home. There is no cost for homeowners who provide a copy of their insurance estimate. Contractors pay Otter Quotes a fee on the accepted bid. We do not work with your insurance company, we do not negotiate claims, and we do not offer inspections or damage assessments. Call 844-875-3412 with questions.
Frequently asked questions
Why is my roof insurance check made out to me and my mortgage company?
The CFPB says a home insurance company generally pays a settlement with a check made out to both you and your mortgage servicer or lender, and that most mortgage agreements require this to protect the lender's interest. Read your loan documents and your policy, or ask your servicer and your insurer, to see what applies to you.
Do I send the check to my mortgage servicer?
Ask your servicer first. The Office of the Comptroller of the Currency says to notify your bank once you receive the check, to determine what steps should be taken, including whether you should send the check to the bank. Servicers have different procedures, so ask for yours in writing.
How does the contractor get paid when the check names my mortgage company?
Your signed contract sets out when and how the contractor is paid. Your servicer has its own steps for releasing money, so ask for them, then ask the contractor whether the payment schedule in the bid can follow them. Ask for the agreed schedule to be written into the contract.
What should I ask a contractor about payment terms?
Ask about the deposit, what starts each progress payment, when the final payment is due, and what lien waiver the contractor provides and when. Ask what could change the price after you sign and how a change would be written down. Ask for a receipt for every payment.
Does Otter Quotes work with my insurance company?
No. Otter Quotes does not work with your insurance company, and we do not negotiate claims. We create a written scope of work for your project and send it to multiple contractors, who compete online with bids on the same work. You compare the bids and sign online.
Sources
- Consumer Financial Protection Bureau, “How do home insurance companies pay out claims?”: the check made out to you and your mortgage servicer or lender; how a servicer releases money; mortgage payments continue.
- Consumer Financial Protection Bureau, “How can I find and work with contractors to rebuild after a disaster?”: check with your insurer and servicer before hiring; what to record in a contract; payment do’s and don’ts.
- Office of the Comptroller of the Currency, HelpWithMyBank.gov, “What do I do with an insurance check payable to me and to the bank?”: notify your bank about the steps for the check.
- Office of the Comptroller of the Currency, HelpWithMyBank.gov, “Why won’t the bank send me the insurance funds for my damaged home?”: banks have different policies and procedures for releasing funds.
- New Jersey Department of Banking and Insurance, “Frequently Asked Questions for Insurance Proceeds Checks”: loss payee, joint checks, release in increments, inspections; written for New Jersey customers, with a 2011 copyright date.