Roof Insurance Check Made Out to the Mortgage Company? Next Steps
Got an insurance check made out to homeowner and mortgage company? Learn how roofers handle endorsements, loss drafts and depreciation to get paid faster.
Photo: Pixabay
On this page 7 sections
- Why an Insurance Check Is Made Out to the Homeowner and Mortgage Company
- ACV and RCV Payment on Roofing Jobs: Depreciation and the Final Check
- When the Mortgage Company Is Holding the Insurance Check
- Roofing Insurance Check Endorsement: What Contractors Can and Can't Do
- Collecting the Deductible and Upgrades Separately
- Documenting Completion to Release Held Funds
- Getting Paid on Insurance Roofing Jobs: Next Steps
Key takeaways
- A check listing the mortgage company usually has to go through the lender's loss draft department before it can be deposited.
- The first claim check is usually ACV minus the deductible, and recoverable depreciation typically follows only after you document completion.
- Never sign for the homeowner or lender, and never offer to waive, cover or absorb a deductible.
- Collect the deductible and upgrades separately, and build your contract and paperwork around the lender's release schedule.
When a homeowner's storm claim pays out as an insurance check made out to homeowner and mortgage company, you can finish the roof long before the money reaches you. This guide explains why the lender is on the check and how actual cash value (ACV) and recoverable depreciation affect the payment schedule. It also covers how mortgage loss draft departments release funds, what roofers and restoration contractors can and can't do with a multi-party check, and how to collect the deductible and upgrades without waiting on the claim.
This is general information, not legal or insurance advice. Policy terms, servicer procedures and state contractor laws vary. Confirm the details for each job with the homeowner's carrier, the loan servicer and a qualified attorney.
Why an Insurance Check Is Made Out to the Homeowner and Mortgage Company
Most mortgages require the borrower to insure the home and to name the lender on the policy through a mortgagee clause. The house secures the loan, so the lender wants to know the claim money actually goes into repairs. When the carrier pays a dwelling claim, it usually puts both the policyholder and the mortgage company on the check.
You will usually see one of two setups:
| Check Type | Payees | What It Means for You |
|---|---|---|
| Two-party check | Homeowner and mortgage company | You aren't on the check. The homeowner has to get the lender's endorsement or send the check to loss drafts before you can be paid. |
| Three-party check | Homeowner, mortgage company and contractor | The carrier added your company, often because the homeowner signed a direction to pay. All three payees typically have to endorse. |
In both cases, the lender controls when the money moves. On small claims, some servicers endorse the check and send it back. On larger claims, they often deposit it into a restricted account and release funds in stages. The servicer's approach usually depends on the claim amount, whether the loan is current and the guidelines of whoever owns the loan.
ACV and RCV Payment on Roofing Jobs: Depreciation and the Final Check
Many homeowner policies pay a roof claim in two parts. If you know the order, you can set expectations with the homeowner before tear-off.
- Replacement cost value (RCV): The adjuster's estimate of the cost to replace the roof with like kind and quality.
- Depreciation: A reduction based on the roof's age and condition.
- Actual cash value (ACV): RCV minus depreciation. The first check is usually ACV minus the deductible.
- Recoverable depreciation: On replacement cost policies, the carrier typically pays the withheld depreciation after the work is finished and documented.
- Non-recoverable depreciation: On ACV-only policies, or under some roof payment schedules, the depreciation may never be paid. The homeowner owes that gap.
An Illustrative Example
The numbers below are illustrative only and don't reflect any specific policy or carrier.
| Line Item | Amount |
|---|---|
| RCV (adjuster's estimate) | $18,000 |
| Depreciation withheld | $5,000 |
| Deductible | $1,500 |
| First check (ACV minus deductible) | $11,500 |
| Recoverable depreciation after completion | $5,000 |
| Homeowner pays directly (deductible) | $1,500 |
If your contract price matches the RCV, the money arrives in three streams: the first claim check, the depreciation check and the deductible from the homeowner. Each can arrive at a different time, and the mortgage company may hold the first two.
Supplements and Code Items
Adjusters miss things such as decking replacement, drip edge, ice and water shield, or upgrades required by local code. Document these items with photos and measurements and give them to the homeowner, who submits the supplement to the carrier. Whether code upgrades are covered depends on the policy's ordinance or law coverage.
In many states, a contractor who negotiates a claim on the homeowner's behalf can run into public adjuster licensing laws. Confirm what your state allows before you speak with the carrier for the homeowner.
When the Mortgage Company Is Holding the Insurance Check
If the mortgage company is holding the insurance check, you'll be dealing with its loss draft department, which some servicers call the insurance claims or property loss department. The homeowner is the servicer's customer, not you. Before you call, make sure the servicer has the homeowner's written authorization on file.
What Loss Draft Departments Commonly Ask For
Requirements vary by servicer. The packet often includes:
- A copy of the check, front and back, endorsed by the homeowner
- The adjuster's estimate or claim summary
- A signed contract between you and the homeowner
- Your W-9, contractor license and certificate of insurance
- A signed borrower authorization or certification form from the servicer
- Lien waivers for prior disbursements
- An inspection request once the work reaches a milestone or is complete
How Releases Typically Work
On larger claims, servicers often release funds in installments. A common pattern is an initial portion to start work, a second release after a progress inspection and a final release after a completion inspection. Some servicers send an inspector. Others accept photos and a signed completion certificate. Ask the servicer early which method it uses, how long inspections usually take and who the next check will be made out to.
It helps to structure your contract around these milestones. Our guide to collecting milestone payments with construction draw schedules shows how to tie each payment to a defined stage of work.
Keep the File Moving
- Get a claim or loss draft reference number and put it on every submission.
- Send documents as one complete packet, not piece by piece.
- Log every call with the date, the representative's name and what was promised.
- Follow up on a set schedule instead of waiting for the servicer to call you.
Roofing Insurance Check Endorsement: What Contractors Can and Can't Do
Endorsement is where well-meaning contractors get into serious trouble. When a check is payable to "Homeowner and Mortgage Company," banks generally require every payee's endorsement before they'll deposit it. Bank policies differ, especially for checks with "or" between the names, so don't assume your bank will accept a partially endorsed check.
What You Can Do
- Endorse the check if your company is a named payee.
- Help the homeowner put together the loss draft packet.
- Accept the funds once the lender has endorsed the check or issued its own disbursement.
- Ask the homeowner to sign a direction to pay, where your state allows it, so future checks include your company.
What You Should Never Do
- Sign the homeowner's or the lender's name, even if someone gives you permission over the phone.
- Deposit a check that's missing a required endorsement.
- Promise to cover, waive or rebate the deductible. Many states restrict this, and it can be treated as insurance fraud.
- Inflate the invoice to absorb the deductible or to pay for upgrades the policy doesn't cover.
If a homeowner deposits a claim check and then stops paying you, your remedies usually run through your contract and your lien rights. Our guide to mechanic's lien steps and deadlines explains how that process generally works.
Collecting the Deductible and Upgrades Separately
The deductible is the homeowner's responsibility, and so are any upgrades they choose, such as better shingles, added ventilation or gutter work outside the claim. These payments don't depend on the lender, so you can collect them on your own schedule.
When to Collect
- Deductible: Many contractors collect it at material delivery or at the start of work. Some states limit how much you can take upfront on home improvement contracts, so check your state's rules before you set a deposit amount. For one state's approach, see our guide to taking contractor deposits legally in California.
- Upgrades: Put each upgrade on a separate change order with its own price so it's clearly outside the insurance scope.
How to Take Payment
Homeowners often prefer to pay the deductible by card. Here are a few practical options:
- On site: A portable reader from MannyPay's lineup of mobile card terminals lets the homeowner tap or insert a card at the kitchen table during the signing appointment.
- Remotely: A virtual terminal for phone and emailed payments lets you charge a card when the homeowner is at work or out of town. Card-not-present payments usually cost more to process, and this article explains why keyed and online transactions cost more.
- Offsetting fees: Dual pricing programs, cash discount or surcharging (where permitted) can help offset processing costs. Each program has its own disclosure requirements and card network rules, and some states restrict surcharging. Confirm current requirements before you turn one on.
A Note on Large Tickets
Roofing tickets are larger than most card transactions. If homeowners may pay a large balance by card, give your processor your expected average and highest ticket sizes during underwriting. An unexpected spike can trigger a review or a hold. This guide on why a processor might hold your funds covers the common causes.
If a payment exceeds your approved limit, ask for an increase. Never split one sale into several charges to stay under the limit. Splitting breaks card network rules.
Documenting Completion to Release Held Funds
The depreciation check and the lender's final release both depend on proof that the work is finished. Build the completion packet as the job progresses so you aren't reconstructing it from memory weeks later.
Completion Packet Checklist
- Final invoice showing the full scope and contract price, with upgrades listed separately
- Before, during and after photos, including decking, underlayment and flashing
- Certificate of completion signed by the homeowner
- Final permit sign-off or inspection record, where your jurisdiction requires one
- Material invoices or delivery tickets, if the carrier asks for them
- Conditional lien waiver for the final payment
Loss draft departments and some carriers ask for lien waivers before they release the final check. Learn the difference between conditional and unconditional lien waivers, and don't sign an unconditional waiver until the funds have cleared.
Watch the Deadlines
Replacement cost policies often set a deadline for finishing repairs and claiming recoverable depreciation. The deadline is written in the policy and differs from carrier to carrier. Ask the homeowner for the claim paperwork at signing so the deadline goes on your calendar as well as theirs.
Getting Paid on Insurance Roofing Jobs: Next Steps
Jobs that get funded smoothly usually follow the same steps:
- At signing: Review the claim summary, confirm whether the policy pays RCV or ACV and note any depreciation deadline.
- Before tear-off: Collect the deductible, put the homeowner's authorization on file with the servicer and start the loss draft packet.
- During the job: Photograph everything and submit supplements through the homeowner.
- At completion: Send one complete packet to both the carrier and the loss draft department, with lien waivers ready.
- After release: Confirm who each check is payable to, and endorse only checks that name your company.
If your crews need to take card payments both in the field and over the phone, MannyPay's payment solutions cover terminals, virtual terminals and cost programs. You can request a free processing quote, and a MannyPay specialist will respond within one business day.
This article is for general educational purposes and is not legal, tax or financial advice. Card network rules and state laws change; confirm current requirements for your business.
