We had water damage. Insurance company tried lowballing the contractor’s estimate but after several weeks they issued money exceeding the contractor’s estimate. But the adjuster’s worksheet does not reflect that. Now the mortgage company — who is also on the insurance claim check — is demanding that they sign off on all the funds they received. Why would they not inspect what is covered in the adjuster’s worksheet and release the rest of the funds to me. As of now they are not releasing any funds — they are asking for a justification for the full amount. How can I overcome this obstacle?
The answer is yes, your insurance company should only hold the amount for work– but that rarely happens. The mortgage company will often require the adjusters worksheet to match the amount of the settlement check. The mortgage company typically releases funds in thirds and at the end of the rebuild any dollars left over funds (if the repairs were done cheaper) can be kept by the insured.
Please ask the insurance company to update the adjuster’s worksheet & loss report to reflect the amended replacement cost value amount.
The adjuster should also send you a statement of loss, and both of those items can be sent to your lender. Once they see the insurance company’s amended estimate of repairs and the statement of loss, (which should also memorialize the agreed cost repairs), you can call for the inspection and they should release the money.
A helpful lender understands that you cannot pay your builder without the next disbursement and as long as their collateral interest in the loan is protected, by virtue of the work you’re doing to repair your home, they have no right to hold you hostage and drag the process out further.