How Long Can a Mortgage Company Hold an Insurance Check?

If you have a mortgage, your lender will require you to buy a homeowners insurance policy. Home insurance protects you from damages and losses due to natural disasters, theft, and accidents.

After you file a claim, the mortgage company may receive the insurance check on your behalf.1 Depending on the circumstances, the lender may set the money aside in an escrow account, holding up the rebuilding process.2

If you find yourself in this situation, here’s how to get your lender to release the funds.

How long can a mortgage company hold an insurance check?

When you take out a mortgage, your lender has a financial interest in your property since it serves as collateral for the loan. As a condition of your loan, your home insurance policy will list your lender, who will be privy to any insurance payouts.

Your lender has to approve the claims check before you can cash it. Depending on the situation, your lender may set the funds aside until the home repairs are complete.

State law determines how long your mortgage company can hold onto an insurance check. But it’s common for lenders to hold onto the funds until the home repairs are complete. Where this gets tricky is if your contractor needs an up-front deposit or ongoing payments, which is common for large construction projects.

What to do if your mortgage company is holding your insurance check

Your lender has a right to hold the funds for a period of time, but they can’t hold the money indefinitely. If your mortgage company won’t release your insurance check, and this is delaying necessary home repairs, you have two main options available to you.

You can either try to work it out with your lender or hire an attorney. Let’s look at the different steps involved in each.

Work it out with your lender

If your lender is receptive, it’s best to start by trying to work out the insurance payouts with them. Here are the steps you can take to get them to release the funds:

Enlist help from an attorney

If your communications with your mortgage company don’t resolve the problem, it may be time to enlist the help of an attorney. Reach out to a lawyer specializing in insurance law or consumer protection for guidance on your next steps.

An attorney can review your mortgage and homeowners insurance documents and identify any misconduct on behalf of your lender. That person can act as your advocate to get the funds released.

Why are insurance claim checks made out to you and your mortgage company?

Because your lender has a substantial investment in your home, your insurance company will make out the claims check to you and your mortgage company. This protects your lender’s investment in the home and ensures all necessary repairs are complete.3

The insurance company may send the check directly to your lender, but in some cases, they may send it to you and your mortgage company. In the second scenario, you’ll need to endorse the check and then send it to your lender.

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