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Loss Draft Department

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Disaster recovery, in the wake of an event that damages your property or home, can be a drawn-out, stressful process full of unexpected roadblocks. To begin, most policyholders expect prompt insurance payments, so they can start to rebuild. However, as many properties are mortgaged, those anticipated insurance claim settlement checks, or loss drafts, are made payable to two parties, the home/property owner and the mortgagee, usually their bank. This dual endorsement means that cashing or depositing these checks isn’t always easy, as they must be signed by all parties.

Why are both parties listed on loss drafts?

When you purchase a property using a loan, the lender has a vested financial interest. One of the requirements by lenders is to list them as a mortgagee or loss payee to assure they get payment for money you borrow.

How do I cash a loss draft payment?

Bank specifications vary. Be sure to check with your lender. Generally, lenders may require you mail the settlement check to their loss draft insurance department with their required paperwork (i.e., the insurance adjuster’s report). The amount of the check impacts what happens when they receive it. If the amount is under $10,000 and your account is in good standing, they likely will endorse the check and send it back to you to manage.

However, if the loss draft amount exceeds this threshold or your account is not current, the process can be drawn out and your timeline to receive these funds extended. With this scenario, in addition to the insurance adjuster’s report, the lender may also require copies of the contractor’s estimates, a damage repair declaration, a lien waiver signed by the contractor, proof of the contractor’s license, and a complete W-9 for the contractor.

Before releasing funds to policyholders, some banks may place the check in escrow and request contractor damage cost estimates. The lender can also elect to release portions of the insurance funds at a time. They may additionally require completed inspections during the rebuild before policyholders can gain access to their entire insurance claim payout.

Can I gain access to my settlement quickly?

It is possible to gain quicker access to your payout to start the rebuilding process. United Public Adjusters recommends taking the following steps:

  1. Communicate

Contact your lender immediately after you submit your claim and learn what their insurance payments process and requirements entail. To be updated on the lender’s expectations, keep the lines of communication open throughout the process.

  1. Document

Document everything the lender tells you and/or ask them to send you their loss draft insurance expectations. Keep track of the individuals you communicate with, including names, departments, and contact numbers in case you have questions at any time during the process.

At United Public Adjusters, we understand that you want to settle your insurance claim as quickly as possible, so you can begin to rebuild your home/property and your lives. That’s why we offer our claims management services. To avoid your having to wait months for that check, United Public Adjuster’s team focuses on your loss draft insurance settlement as quickly as possible. For greater peace of mind, a shorter turnaround, and a positive outcome, allow our team of professionals to oversee your asset loss claims management.


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