Can A Mortgage Company Keep Your Insurance Check?

Find out how to get your Mortgage Company to release your Insurance check.

A lot of people today buy homes with a mortgage, because who has that much cash just sitting around?

And even if they do, it is considered a smart idea to opt for a mortgage and use that cash for unexpected expenses that rise. If you buy a house with a mortgage, the insurance company will consider you AND the home lender equal co-insurers. The house lender now has a financial interest in the property and the insurance company will protect that. The insurance company will literally cover everyone who has a financial interest in your property- it is as simple as that!

Imagine the beautiful house you got, gets damaged by a flood or some other natural hazard. You have sent pictures and related documents to the insurance company and they write a check for you and your mortgage company.

If all goes well, you will need to coordinate with the mortgage lender and cash out the check. But if all doesn’t go well, you’re in for quite a hassle.

How long does an Insurance Claim Check take?

Every state has a different claim process. Usually it is in between 10-30 days to acknowledge the claim and then 40 days to accept or deny it. This 40 days situation is generally in California, where companies may also give additional time if a policyholder wishes. Once they accept the claim, the money should be given out within 30 days of accepting it.

In Kansas, even though there isn’t a recommended date of when the claim must be paid, it usually takes around 45 days of investigating the claim. And 30 days to accept it.

In Missouri, insurers usually give 10 days to policyholders to accept or deny the claim and then notify them and then 45 days to cash it.

The mortgage company however should release the check within 10 days of receiving it. But that’s when everything’s well and good. In an alternate, very real world, that rarely happens. And we’ll discuss ‘why’ later in this article.

How long does a settlement check take?

A settlement check is basically what your attorney will give you after all the legal fee has been cleared. Usually a settlement check takes six weeks to get cleared and be off the table. Within this duration you are required to take action: gather up the money and pay for damage repairs. A settlement check from the insurance company will ideally be handled by your lawyer, so ask them about any questions or concerns you may have and they will guide you better.

How do you cash a check with the mortgage company’s name on it?

The easiest way to do so is to have the company on board with you. Even if they have held your check, the best way is to openly coordinate with them about the whole situation.

Most lenders have the right to hold your check and insurance claims during the process that your house is being renovated or repaired. But it is important for the check to be endorsed for it to be cashed out. Without hard cash in your hands you will not be able to pay for any repairs.

What is check endorsement and how does it work?

Check endorsement is a simple yet very important process. It is basically a proof of any change in the policy and the insurance company has to take care of it. Now since the mortgage company is also equally in on this, it is important for the check to be endorsed by them.

If the check is in your mortgage company’s name, of course you can’t walk in the bank and have it cashed out. Because your name isn’t on there. Usually a repairs check made out for more than $10,000 will need the endorsement of your mortgage company, if it is anything less, it wouldn’t require being endorsed. This is why insurance claim check cashing has a little technicality that you need to get ahead of.

If the check from the insurance company needs endorsement, you simply have to call up your mortgage company and contact their ‘loss draft department’. Now that that’s done, what’s next?

They will send you a packet which requires all important documents and information that they will need from you such as proof of the contract AND the damage done to your house. Ideally, when you do that the check is easily endorsed and you’re good to go. You cash out the check and pay for damages.

Note down every little detail and every piece of information you’ve come across after the mortgage signing. Stay in touch with relevant people and use those contacts to build up your case.


Yes, the mortgage company has the right to keep your insurance check because they are also listed as co-insurers. And they can hold it until the process isn’t settled.

Usually it gets settled before legal entities have to intervene, and things get normal before you even have to file a claim. But on the off chance that you do, make sure you have all your documentation in place along with application forms and dates. This will help you build a stronger case against your mortgage company IF they hold your check and refuse to release it to you.

To avoid all of this hassle, the moment your house is damaged, call up your mortgage company or your lender and explain the whole situation to them. Before they even talk about the insurance check, make sure all of you are on the same page. And when the insurance company gives you a check, make sure it is endorsed by the mortgage company so that you are able to cash it out to pay for repairs.

The process sounds easy, but could also have a lot of complications if any one entity isn’t on board. So it is important for you to be the bridge between this situation and handle it professionally.

Tony Bennett

Tony Bennett

Tony Benett makes his living in the insurance industry by teaching and consulting. He is also recognized by the legal profession as an expert on insurance coverages. His insurance experience includes having worked at the company level, owned an independent general agency and having worked for an insurance association. He has received various certificates over the past few years and helps his clients and readers by giving them a realistic outlook on what they can expect to achieve within their set targets. At Insurance Noon, he is known for his in-depth analysis and attention to details with accuracy. He has been published as one of the most referred agents by his peers in the insurance community. Tony loves the outdoors and most sport events. His passion other than providing excellent advice is playing golf.

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