by dwisetiger » Wed Dec 08, 2010 11:12 am
What happens to active property loss insurance claims when the mortgage company forecloses. All checks are made out to me and insurance company. Does whether or not repairs have been started change the answer?
Posted: Wed Dec 08, 2010 12:01 pm Post Subject:
The insurance company money is intended to effect repairs due to a covered loss. If the property has been foreclosed upon and no repairs were ever attempted or in process, logically the money belongs to the lender who has now suffered a property loss in addition to breach of contract.
Posted: Thu Dec 09, 2010 03:27 am Post Subject:
I'd agree with Max in saying that it should go to the lender if no repairs have been made. Why should it go to someone who hasn't initiated or completed any repair works?
Posted: Thu Dec 09, 2010 03:35 am Post Subject:
Why should it go to someone who hasn't initiated or completed any repair works?
Especially if they've already skipped out on their mortgage payments and have lost their interest in the property.
One of the legal tenets of insurance is "insurable interest". In property and casualty insurance, insurable interest must exist at the time of application and at the time of a claim. If there is no longer any insurable interest, the claim would only be payable to the lender.
The fact that the loss occurred just prior to foreclosure permits the OP to file the claim, but the insurance company was entirely correct in making the check payable to both the insured and the additional insured in this instance.
The check should be endorsed by the OP to the lender and the OP should continue walking.
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