How The Payment Process Works
Now comes the settlement, which is the payment and conclusion of the claim process. Based on the extent of coverage available under your policy, a fair, prompt, and equitable settlement will be provided.
- A payment for your loss or damage will be sent directly to you, unless you have authorized otherwise. Some construction firms may require you to sign a form that will allow us to pay the them directly. Some times we may provide a claim check in both your and the contractors name jointly, requiring you to "sign off" before the contractor can cash the check. In either case, make certain that you're completely satisfied with the repair work and that the job has been completed before signing any forms.
- If your home is mortgaged, the check for home repairs can often be made out to both you and the mortgage lender. As a condition of granting a mortgage, lenders usually require that they are named on your policy and that they are a party to any insurance payments related to the home or building. The lender gets equal rights to the insurance check to ensure that the necessary repairs are made to the property in which it has a significant financial interest. This means that the mortgage company or bank will have to endorse the check. Lenders generally put the money in an escrow account and pay for the repairs as the work is completed. You should show the mortgage lender your contractor's bid and let them know how much the contractor wants up front to start the job. Your mortgage company may want to inspect the finished job before releasing the funds for payment.
- In regards to a claim settlement for your personal belongings, if you have a replacement cost policy for your possessions, you normally need to replace the damaged items before we will pay you the replacement value. If you decide not to replace some items, you will be paid their actual cash value. You don't have to decide what to do immediately, we will allow up to 180 days after the date of the loss to replace the item. A similar rule applies to repairs. Suppose you decide to change the kitchen flooring materials when you rebuild. If you replace your expensive floor with materials that are cheaper but more practical, you are not entitled to the difference in cash. Unless the cost of repairs is a small amount, we may initially pay you a sum equal to the actual cash value. We will withhold the balance of the full replacement cost amount until after the repairs are completed.