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When a House is Destroyed by Fire/Flood, How Does the Insurance Company Split the Claim Payment Between the Homeowner and the Bank?
August 2, 2020
After a Loss You and Your Mortgage Holder May Work Together
It is typical for a homeowners insurance policy's “Mortgage Clause” to spell out how losses will be paid when a bank has an interest in the property. A snippet from a ISO Homeowners HO-3 Policy form is below:
The basics are that the insurance company will write a check to you (the insured) and the mortgagee (bank). The parties involved can then work together to determine how best to repair or replace the home.
For small claims, the bank may have the funds distributed to an agreed-upon contractor.
For more significant claims, the bank may set up stages for the work that must be completed before earmarked funds are released. Inspections may be part of that process.
In rare cases where the home is not repaired or replaced, the bank will likely close out the mortgage, and split the proceeds accordingly.
Have more questions about your Homeowner’s Insurance? We love to help! Please feel welcome to call us at 607-324-7500 for assistance with all of your insurance needs.
For small claims, the bank may have the funds distributed to an agreed-upon contractor.
For more significant claims, the bank may set up stages for the work that must be completed before earmarked funds are released. Inspections may be part of that process.
In rare cases where the home is not repaired or replaced, the bank will likely close out the mortgage, and split the proceeds accordingly.
Have more questions about your Homeowner’s Insurance? We love to help! Please feel welcome to call us at 607-324-7500 for assistance with all of your insurance needs.
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Part 7 – Designing a Value-Driven Insurance Plan
Part 6 – Advice, Advocacy, and Answers
Part 5 – Can Your Company Deliver?
Part 4 – Custom Coverage = Real Protection
Part 3: Coverage Limits - "The Ceiling You Don't Want to Collapse"
Part 2 – The Risks of Chasing Cheap
Part 1: What Are You Really Paying For?
Insurance fraud is a significant problem, exceeding $300 billion annually, with the Property and Casualty sector contributing nearly $50 billion to that total.
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The year 1962 was marked by historic events—from the Cuban Missile Crisis to the passing of Marilyn Monroe. But while the world focused on these headlines, Lee A. Ryan was working alongside his brothers on my grandparents' farm when an unexpected opportunity arose—an invitation to join the insurance business. With no prior experience, no clients, and limited resources, my dad took a leap of faith and partnered with Nationwide Insurance to start an agency from scratch. Operating out of his home on Karr Valley Road in Almond, NY, he built his business one relationship at a time (some of whom are still clients!), laying the foundation for what would become a lasting legacy.
