Insurance claim rehab - so far so good?

Question

We had a major flood in an upper unit that spread through 2 units and now I'm in the middle of a major insurance claim and subsequent rehab - good times! I've never done this before, so some of the procedures are pretty foreign to me. For example - because of the amount of the first check, they had to physically mail me a check to endorse, then I had to send that to my mortgage company - who also has to sign it and then they're mailing that back to me. The pillar of efficiency! I understand that this is to ensure that we actually do the rehab and not just pocket the money. My questions are:

- Should I expect some kind of "final inspection" from either the mortgage or insurance side?

- Is my insurance premium certainly going up now?

Thanks for any insight, tips and encouragement! Some "before" pics below!

- Should I expect some kind of "final inspection" from either the mortgage or insurance side?

- Is my insurance premium certainly going up now?

Thanks for any insight, tips and encouragement! Some "before" pics below!

JD Martin · Answer

I had a major flood in my own house almost 20 years ago. The heat went off in the winter while the house was unoccupied, we had a week of record lows and the pipes froze and burst in the house everywhere. The entire downstairs was destroyed and there was extensive water removal upstairs. My insurance covered everything but my deductible and the proximate cause (the broken pipes). My rates did not go up. 5 years after the flood a large branch went through my roof and storm damage got me a new roof. I had to cover the depreciated difference but again my insurance did not go up.

If they've just cut you a check it's doubtful you'll see anyone again, so you will have to do your own diligence in making sure the place is repaired. They had your mortgage company endorse because that was the proof that you were paid out for a loss and should have repaired, in case you decided to just walk off into the sunset the lender could sue you for those proceeds as well.

Tom Harkins · Answer

@Christen G. My experience from a major fire loss claim is that after insurance issued payment to me and my mortgage company, the mortgage company then disbursed checks with both myself and my contractor listed as payees.

Have you hired a contractor yet? Mine required a release of information authorization and permission for my mortgage company to disburse funds to them in order to make that happen. The mortgage company in turn required a waiver of lien and W-9 from the contractor, as well as certification of my intent to repair the property.

The mortgage company “inspects” twice- once at approximately 50% and again at completion, to make sure the property is actually being repaired.

Christen G. · Answer

Appreciate it, @JD Martin - my mortgage company is taking their time - but I'm inspired by your rates not going up. My broker is telling me "it probably will a little b/c you're going from no claims to having a claim" - so we'll see. Thank you again.

Christen G. · Answer

Thanks, @Tom Harkins - this is helpful. And sorry about your fire! I have hired the contractors and am fortunate enough to have been able to come out of pocket to get them started I'm trying to get this done and re-rented before the winter. Hopefully I won't have to do that 2nd round of authorizations/payees thing - sounds annoying. Thanks again for the insight.