Tips About the Payment Process
Here are some suggestions about measures to take regarding your claim payments:
FIRST STEP: Promptly open a new/separate checking account for the duration of the project to keep insurance proceeds separate from your personal finances. This will allow you to use that checking account to make payments and to keep track of all financial activity related to your claim. You will receive many different payments from your insurance company for many different vendors, and you will make payments accordingly. This can get very confusing if you don’t keep good records.
SECOND STEP: Pay your vendors only out of the dedicated bank account, only for completed work, and only AFTER you have been paid for the work by the insurance company and the funds have been released by your mortgage company. Make sure that the companies you hire are clear that they will be paid only after these conditions are met. (At Coast, we put this in our contract). Otherwise, they may demand payment before you have received the money to pay them, and this can result in delays, liens, and job stoppages.
MORTGAGE COMPANY: Got a mortgage? The bank owns part of your house, they have an interest to protect, and State law enables them to be named on the insurance policy and the claim payment checks as well as you. Most banks have a separate department that handles this sort of thing. Be aware that funds to rebuild your house will almost always go to the mortgage company first, and they will only pass those funds along for you to use to pay vendors after they have received tons of required paperwork that is in perfect order, and have made repeated inspections of the property. Setting up the process with your mortgage company very early is important so that funds are available to make timely payments to vendors and to keep repairs moving. This process is extremely time-consuming, complicated and critical. Coast has a dedicated employee who has the knowledge and experience to handle all of this so that you don’t have to.