Jamie is a meticulous researcher who has published 2,000+ personal finance articles. Her expertise is trusted by major brands like Bankrate and Rocket Mortgage.
3+ years experience in insurance and personal finance editing
Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.
Updated October 21, 2024 | Reading time: 3 minutes
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If you have a mortgage, your lender will require you to buy a homeowners insurance policy. Home insurance protects you from damages and losses due to natural disasters, theft, and accidents.
After you file a claim, the mortgage company may receive the insurance check on your behalf.[1] Depending on the circumstances, the lender may set the money aside in an escrow account, holding up the rebuilding process.[2]
If you find yourself in this situation, here’s how to get your lender to release the funds.
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How long can a mortgage company hold an insurance check?
When you take out a mortgage, your lender has a financial interest in your property since it serves as collateral for the loan. As a condition of your loan, your home insurance policy will list your lender, who will be privy to any insurance payouts.
Your lender has to approve the claims check before you can cash it. Depending on the situation, your lender may set the funds aside until the home repairs are complete.
State law determines how long your mortgage company can hold onto an insurance check. But it’s common for lenders to hold onto the funds until the home repairs are complete. Where this gets tricky is if your contractor needs an up-front deposit or ongoing payments, which is common for large construction projects.
What to do if your mortgage company is holding your insurance check
Your lender has a right to hold the funds for a period of time, but they can’t hold the money indefinitely. If your mortgage company won’t release your insurance check, and this is delaying necessary home repairs, you have two main options available to you.
You can either try to work it out with your lender or hire an attorney. Let’s look at the different steps involved in each.
Work it out with your lender
If your lender is receptive, it’s best to start by trying to work out the insurance payouts with them. Here are the steps you can take to get them to release the funds:
Review your insurance policy
It can help to understand the terms and conditions surrounding claims payouts.
Reach out to your mortgage company
Ask them to explain the delay in the insurance payout and give you a clear timeline for receiving the funds.
Document every interaction with your lender
Note the date and time of each conversation, and include brief summaries.
Document and keep receipts
Keep a record of every additional expense you incur as a result of the delay, like additional living expenses or higher repair costs.
Send a written complaint
Contact your mortgage company to outline the problem and request immediate action.
Hire a public adjuster
You can also hire a public adjuster to settle the insurance claim on your behalf.
Enlist help from an attorney
If your communications with your mortgage company don’t resolve the problem, it may be time to enlist the help of an attorney. Reach out to a lawyer specializing in insurance law or consumer protection for guidance on your next steps.
An attorney can review your mortgage and homeowners insurance documents and identify any misconduct on behalf of your lender. That person can act as your advocate to get the funds released.
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Why are insurance claim checks made out to you and your mortgage company?
Because your lender has a substantial investment in your home, your insurance company will make out the claims check to you and your mortgage company. This protects your lender’s investment in the home and ensures all necessary repairs are complete.[3]
The insurance company may send the check directly to your lender, but in some cases, they may send it to you and your mortgage company. In the second scenario, you’ll need to endorse the check and then send it to your lender.
Insurance check FAQs
If you file a home insurance claim for a small amount, your mortgage lender may release the funds immediately. But if it’s a large claim — exceeding $10,000 or $15,000 — your lender may hold the funds in an escrow account. Here’s some additional information about the claims process.
Why would a mortgage company hold an insurance check?
Your mortgage company might hold onto your insurance check because they have a vested interest in your home. Your lender may keep the funds for financial protection and to ensure the house receives necessary repairs.
Does a mortgage company keep leftover insurance money?
Your lender shouldn’t be able to keep any remaining insurance payout. If there are leftover funds after the insurer issues the final payment, the property owner should receive them. Checking your mortgage agreement and insurance policy will help you understand the specifics of your situation.
What happens if you never cash an insurance check?
If you don’t cash an insurance check, it’ll eventually become void. Most checks have an expiration date between 60 and 180 days from the date issued.
How long does it take for a bank to hold an insurance check?
How long a bank can hold an insurance check before releasing the funds depends on the amount, state law, and any federal regulations.
When do you need an attorney to get your insurance check back?
If your mortgage servicer is holding your insurance check for an unreasonable period of time, causing costly delays in the repair process, you may need an attorney to intervene.
Jamie Johnson is a Kansas City-based personal finance writer whose work has been featured on several of the top finance and business sites in the country, including Insider, Credit Karma, Bankrate, Rocket Mortgage, Fox Business, Quicken Loans, and The Balance. For the past six years, she's dedicated more than 10,000 hours of research and writing to more than 2,000 articles about personal finance topics.
Edited byKatie PowersAuto and Life Insurance Editor
Katie PowersAuto and Life Insurance Editor
Licensed auto and home insurance agent
3+ years experience in insurance and personal finance editing
Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.
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