What to do with the cash left over from home insurance? – Zing! Quicken Loans Weblog
How do insurance companies pay out claims?
In many cases, people who live in their own homes are not the sole owners, especially when renting a mortgage or paying a mortgage. If so, the insurance payout may not go to them, but to their mortgage lender, property owner, or other entity. Read on to find out who will get the insurance benefit based on the type of property.
Homeowners are more likely to receive coverage directly as they own the property, but this is not always the case. Read the insurance company's policies to verify this. In this case, it is the homeowner's responsibility to pay for the repairs with the home insurance payout.
For mortgage lenders
Those with mortgages receive their insurance payout to the mortgage lender. Often times, a homeowner with a mortgage must work with the company they are taking out the mortgage with in order to receive the payout. You can even ask to oversee the repairs or hire a contractor yourself.
For property management companies
Home insurance claims for an apartment or condominium often go to the association or property management company that owns the rights to the property. This requires homeowners to request payment from the property management company and possibly obtain their approval for repairs.
In some cases, insurance companies pay the contractor directly rather than the homeowner. If an insurer has its own network of repair professionals, or if the claim is assigned to a general contractor on behalf of the homeowner, it is more likely that the money will go directly to the repairers rather than the homeowner.