Orlando Harmon
Homeowners' insurance claim checks can be confusing, especially when it comes to understanding whether or not you can cash the check. The process begins when you contact your insurance company to report damage to your property, after which an adjuster is sent to assess the damage. Once the adjuster has determined the extent of the damage, the insurance company will send you a check. If you have a mortgage, the check will likely be made out to both you and your mortgage lender, and you'll need to follow the lender's procedures for getting the check endorsed and cashed. If the check is made out to you and a contractor, you'll need to work with them to endorse and deposit it. It's important to handle the money responsibly as it's intended for specific repairs. Before cashing the check, carefully inspect it to ensure it is not marked as full and final satisfaction or payment on your claim, as cashing it may impact your ability to recover more money.
| Characteristics | Values |
|---|---|
| What to do when you receive a check from the insurance company? | Read the check carefully to see if it is marked as "full and final" payment. If it is not, it is generally safe to cash it. If it is, ask the insurer to reissue the check without the marking. |
| What if I have a mortgage? | If you have a mortgage, the check will likely be payable jointly to you and the mortgage company. You will need to follow the procedures set by the lender, which may include endorsing the check and sending it to them. They may place the funds in an escrow account and release them in increments as repairs are completed. |
| What if the check is made out to me and a contractor? | You will need to work closely with the contractor to endorse and cash the check, and ensure that the funds are disseminated appropriately for repairs. |
| What if I'm unsure about the check or its implications on my claim? | If you have doubts or questions, you can seek guidance from insurance attorneys or legal counsel before cashing the check. |
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What You'll Learn
If the check is for less than you're entitled to
Before cashing the check, carefully examine every word on it. If the check states anywhere on it "full and final" satisfaction, payment, or settlement, cashing it may allow your insurance company to argue that you accepted the check amount as payment in full, waiving your right to pursue further legal action and compensation. This legal concept is known as "accord and satisfaction." Thus, it is recommended to not cash a check that says "full and final" settlement or payment.
If the check does not indicate that it is a "full and final" payment, it is generally safe to cash it, but it is strongly advised to notify the insurer in writing beforehand that you consider it a partial payment and that you expect to receive the remaining balance owed. It is also important to handle the money responsibly, as it is intended for specific repairs covered by your insurance policy.
Additionally, consider consulting a lawyer before cashing the check, especially if you have doubts or questions. Most attorneys offer free consultations, and they can assist in evaluating the settlement check to determine if it reflects a full and fair compensation for the sustained damage. Understanding the role of the "claims adjuster" is crucial, as they will determine the amount of coverage and negotiate settlements. By seeking legal advice, you can ensure that cashing the check will not prejudice your ability to recover more money on your claim.
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If the check is made out to you and your contractor
If the check is made out to both you and your contractor, you will need to work with your contractor to endorse and deposit the check. You will need to work closely with your contractor to cash the check and allocate the funds appropriately. It is important to remember that the money is intended for specific repairs covered by your insurance policy.
In some cases, your mortgage company may require their endorsement on the check as well. This is because the mortgage company has a vested interest in ensuring that repairs are made to protect the value of your property. They may have specific procedures in place to endorse the check, such as requiring a conditional lien waiver from the contractor or an affidavit from the homeowner or contractor stating that the damage will be fixed. They may also hold the money in escrow, releasing it in parts or at the end of the work.
To navigate this process, you should contact your mortgage company's loss draft department to understand their specific requirements. They may ask you to show a copy of your loss and the contract from your contractor for the work before they sign off on the check. It is important to keep good notes and stay organized throughout this process.
Receiving multiple claim checks from your insurance company is not uncommon. This can happen when your insurance company issues an initial check for immediate repair needs, such as emergency services or temporary fixes, and then provides additional checks once the full scope of the damage is assessed. Your insurance company may also distribute funds in stages, especially for extensive repairs.
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If you have a mortgage
To cash the check, you will need to follow the procedures set by your lender. Usually, this will involve contacting their loss draft department and asking them about their procedure for getting the check endorsed and cashed. They may ask you to endorse the check and send it to them, or they may request that you send them the details of the contractor who will be carrying out the repairs.
Some mortgage companies may demand an affidavit from the homeowner or contractor, stating that the necessary repairs will be carried out. They may also want to inspect the work, either during or after the project, to ensure that the funds are being used for their intended purpose.
Once the repairs are finished, the mortgage company will do a final inspection. If the repairs are up to standard, the remaining funds will be released to you.
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If you're unsure whether the check is full and final payment
If you are unsure whether the check is full and final payment, the first and most important thing to do is inspect the check carefully. It is rare, but the check may be marked as "full and final" satisfaction or payment on your claim on the memo line or somewhere on the front or back of the check. Examine every word on the check before cashing it. If the check states "full and final" satisfaction or payment, your cashing of the check may allow your insurance company to argue that you accepted the amount of the check as payment in full for your claim. This is a legal concept known as "accord and satisfaction", which essentially means that cashing the check operates as an agreement to accept the amount as full payment.
To avoid this, do not cash a check that says "full and final" settlement or payment. If the check does not say "full and final" settlement, this is the first step towards ensuring that cashing the check will not prejudice your ability to recover more money on your claim. Just like the check itself, you should examine every word of the letter your insurance company sends with the check. Under Florida law, if an insurance company sends a partial payment that is not intended as payment in full on the claim, it is required to include in the letter accompanying the check the following language in 12-point bold uppercase: "WE ARE CONTINUING TO EVALUATE YOUR CLAIM INVOLVING YOUR INSURED PROPERTY AND MAY ISSUE ADDITIONAL PAYMENTS." Alternative language may also be used that explains that the insurance company does not intend the check to constitute full and final payment. If the letter accompanying your check contains language like this, it would suggest that your insurance company does not intend the check to constitute full and final payment, and it would be safe for you to cash the check.
It is important to read the accompanying letter carefully and thoroughly and understand what it means. If you do not understand all the language in the letter or have questions about the letter or your insurance company's intentions, you should seek guidance or legal counsel before cashing the check. Consider the context in which the check was sent. Was there any discussion, either verbally, over the phone, or via email, between yourself and your insurance company about the value of your claim or any potential statement made by you that could be perceived as an agreement to accept the amount of the check in full and final satisfaction of your entire insurance claim? If there was no such discussion or alleged agreement, and the check merely came in the mail after the insurance company inspected your home, and both the check and the letter accompanying the check do not suggest the check was sent as full and final payment, your cashing of the check should not prejudice your ability to recover more money on your claim.
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If you need to pay for immediate repairs
If you need to pay a contractor for immediate repairs, the check may be made out to both you and the contractor. In this case, you will need to work closely with the contractor to endorse and deposit the check, ensuring that the funds are used appropriately for the specific repairs covered by your insurance policy.
It is important to note that you should not make extensive permanent repairs until after an adjuster has assessed the damage. You should also be wary of contractors who encourage you to spend a lot on temporary repairs, as these payments are part of the total loss settlement.
Before cashing a check, carefully examine its wording to ensure that it is not intended as a "full and final" payment for your claim. If the check does not state this, it is generally safe to cash, and you can notify your insurer in writing that you consider it a partial payment. However, if the check is intended as full and final payment, you should ask the insurer to reissue it without this wording.
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Frequently asked questions
If the check is made out to you, you should be able to cash or deposit it at your bank. If the check is made out to you and your mortgage lender, you'll need to follow the lender's procedures. This usually involves endorsing the check and sending it to the lender, who will place the funds in an escrow account and release the money in increments as the repairs are completed.
You will need to work with your contractor to endorse and deposit the check, then disseminate the funds appropriately.
If the check does not say "full," "final," or "settlement," it is generally safe to cash it and send an email or letter to the insurer confirming that you are accepting it as a partial payment. If the check includes these words, ask the insurer to reissue it without them.
Do not use insurance funds to pay off your mortgage until you have a plan to replace your dwelling. If you have a mortgage, the checks your insurance company sends for repairs or rebuilding will be payable jointly to you and the mortgage company.
