Understanding the Settlement Process of Your Property Damage Claim

“Congratulations! Your case has been settled and you are now in the settlement process!” Great news to receive after the exhausting and long process of your insurance claim, right? Unfortunately, the settlement process is oftentimes quite a bit more complicated than many are aware of.

If you’ve filed a property damage claim with your insurance company, you may think that the settlement process consists of simply receiving an agreed-upon lump sum payment from the insurer. However, there are several conditions that can alter the steps of the process before you receive your settlement check.

Let’s Take a Step Back to the Settlement Offer

If the offer your insurer makes to you is less than what you expected, or your claim is denied, the services of a skilled attorney experienced in handling insurance claims can be invaluable. Your attorney will ask you what amount of money you need to settle the case and will use that number — along with other information — to make a formal demand to your insurer.

Once the insurer makes an offer, the attorney will present that offer to you, and you can either accept or reject it. If you accept the offer, asking for more later on is generally frowned upon unless new damage is discovered or there is another valid reason. If the offer is rejected, your attorney will continue to negotiate with the insurer and, if necessary, take the case to court.

Receiving Your Settlement Funds

Once a settlement amount is agreed upon, it’s time to pay out the funds to you, the client! However, as we have already revealed, this process isn’t always as straightforward as it seems and certain conditions may affect your payment. If you have a mortgage on your property, for example, several steps are usually required. Let’s discuss some of these conditions:


If you have a mortgage company, you can expect your mortgage company to be listed on most (but not all) settlement checks. In fact, if you have multiple mortgage companies, you can expect each one to be listed as a payee on the settlement check as well. If a mortgage company is listed as a payee on your settlement check, then the mortgage company will be able to control how the funds are released to you. That is why it is very important to always keep your mortgage information updated with your insurance carrier!

As a part of the mortgage company’s process, the mortgage company will most likely ask for items such as a signed contract from the contractor that will be doing the repairs, a copy of the contractor’s license, and other documents. Once the requested paperwork is submitted, the mortgage company will release the funds. Sometimes, the funds will be released as a lump sum payment, or they can be released in installments as repairs to the property progress. 

This is typically done in order for the mortgage company to ensure that the homeowner is keeping the property in good condition, as required by the terms of the mortgage. This usually makes sense since the property is the collateral for the mortgage company’s loan.

Assignment of Benefits (AOB)

As an insured on the insurance policy, you should always be named as a payee on the settlement check unless you assigned the benefits of the insurance claim to a contractor or another person. 

If you assigned the benefits of the insurance claim to another person or company, then that person or company will typically be named as a payee on the settlement check instead of you. That is part of the assignment of benefits agreement, or “AOB” for short.

Direction to Pay

Another situation arises when you sign an agreement with a “Direction to Pay” clause. These types of agreements are commonly used by contractors when they are hired to make repairs to your property in exchange for payment from your insurance claim. 

The “Direction to Pay” clause directs your insurance carrier to list the contractor on certain settlement checks. Do not forget to always review any contracts before signing them so you are aware of how it may affect you in the future. If you need assistance understanding a contract and how it may affect you, it is recommended that you contact an experienced attorney before signing the contract. 

How a Florida Property Insurance Attorney Can Help

As you can see, the settlement process of a property damage claim can be complicated. If you need help with your property damage claim, reach out to us. We not only negotiate with your insurance company or take them to court, if necessary, but we also handle all the paperwork as well. With a dedicated Settlements Department that takes care of the process after the claim has been settled, our clients are assisted every step of the way.

Don’t go through the process alone. Call the Pros at 800-LAW-4141. Florida Professional Law Group is here to help.

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