The storm has passed, the damage was discovered and reported and the adjuster has inspected your home. Now comes the good part, payment for the repair work. First of all, be aware that most payments for homeowner repair work will come to you in the form of one check for each type of damage; this means you could receive one check for the dwelling repair, one for contents repair or replacement, and if necessary, you may receive a check for additional living expenses if you are forced to live outside of the home due to the damage and required repair work.
After the evaluation of the damage is completed and a final total arrived at, the check(s) will be issued for all the work required. The checks should have some type of information regarding the method taken to determine how the value was arrived at either on the checks, or in the form of a separate letter dealing with the mathematics of how the total(s) was determined.
One of the most frustrating elements of receiving payment for the repair deals with the insurance company being forced to place the name of the mortgagee on the check. Placing the name of the mortgagee on the check is necessary due to the fact the bank has a financial interest in your home and there is a portion in your homeowner’s policy which requires the name of the mortgagee or mortgagees to be listed in the order of their interest in your property. Usually the name of the mortgagee is placed only on the check for the repair of the dwelling.
Depending upon the severity of the damage, the mortgagee may send an inspector to your home to evaluate the progress and quality of the repair work. It is quite possible the mortgagee may place the initial payment received for the building repair work into an escrow account. Repairs for the work will then be issued by the mortgagee to the contractor on a percentage basis which is usually established by the mortgagee.
In the next article, we will be dealing with some of the issues that occur during the evaluation of the loss, especially in regards to applying depreciation.