Home Insurance: What You Need To Know About An Important Clause

Picture this: You were out and about for the day, and when you come home, you are surprised to find your home filled with standing water from your fridge water supply. Or the hurricane you were preparing for damaged your home. Whether it is an everyday emergency or a natural disaster, there may come a time when you need to access your homeowner’s insurance.

Many homeowners are unaware of additional clauses that are placed on home insurance and are in for a big surprise when they need to file a home insurance claim. Accessing the cash you thought was part of your homeowner’s insurance policy may be much more difficult than you think.

Many companies have a quick turnaround on funds for a capped amount to be immediately used in an emergency. However, when homeowners try to make larger claims for home repairs, a little thing called the “Mortgagee Clause” may get in the way.

Tony K. was left to deal with the aftermath of Hurricane Sandy in 2012 and found out firsthand about this seemingly hidden clause. Tony and his family were left without heat and power for 11 days, and when the power returned, he filed a claim with his insurance company to pay contractors who made emergency repairs, fixed the electrical and heating systems, and hauled away the storm debris.

TD Bank quickly paid Tony $7,500 for the repairs, but when it came to the balance of the $85,000 claim, things were no longer quick and easy. When the check arrived, it had Tony’s name on it as well as Weichart Financial Services, the mortgage holder on the house.

His wife was unable to cash the check and was told the check had to be endorsed by a Weichart Financial representative. A local Weichart Financial branch office could not endorse the check and Tony had to mail the check to the address where the mortgage correspondence came from.

After waiting for the endorsed check to be returned only to have it not show up, Tony called the mortgage company who confirmed receipt for the check, but they told him they would not return it to him until he got an estimate for the repairs.

This little-known “Mortgagee Clause” has tripped up many a homeowner trying to access funds for home repair. Such clauses allow banks to control the insurance cash by requiring representatives to sign insurance checks, or even put the money in an escrow account, only to release the funds when repairs are finished.

Homeowners are forced to pay repair costs up front, and most people don’t have an $85,000 credit limit to even allow such a thing to happen. And most need their monthly income just to pay the mortgage and other bills. So homeowners are faced with an unsafe, damaged home and the stress of reimbursement from an insurance company.

There are not always clear answers if homeowners will get reimbursed, so they are left hanging in frustration. If they are lucky, hours upon hours of phone of phone calls with the insurance company and bank may make a difference, and by then, homeowners feel jilted and exhausted.

Homeowners who have gone through such experiences agree that the federal government needs to intervene to establish better guidelines so homeowners are not left hanging in the middle of a home emergency situation. In the meantime, homeowners should check their mortgage insurance guidelines and get clarification on what their insurance claim process entails.

Insurance Claims Lawsuit information

If you have submitted home insurance claim for damage to your home and have had difficulty in accessing your insurance claim money, an attorney may be able to assist you in your case. Consultations to review your case and determine your legal options are complimentary.

Join a Free Insurance Property Claim Class Action Lawsuit Investigation

If you have experienced difficulty recovering insurance property claim money from your mortgage company, you may have a legal claim. Submit your information now for a free case evaluation. If you qualify, a lawyer will contact you to discuss the details of your case.

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