Over the years we have dealt with a very large number of household claims. When dealing with large settlements we have discovered surprisingly, time and time again, that the insured will not be aware of the banks interest on their property. If there is a mortgage on your home your bank will have an interest in your property and your insurer is obliged to make your settlement cheque payable to you and your bank if they are aware of that interest. This is where problems arise following a claim.
The bank may be slow to pass the funds on to you – whether you are behind in your payments or not. Due to the confidential nature of our business we cannot talk about specific cases but we have put together the following scenario which is based on cases that we have dealt with;
A family home is completely destroyed by a fire, only the walls remain and the contents of the home are also destroyed. We get the call and attend the site and survey the damage. In the mean time, the family has moved into rental accommodation. Forensic investigations took 6 weeks but eventually liability is accepted.
With our survey completed, our team meet with the insurance company’s chosen loss adjuster to agree the detail and scope of the reinstatement works on behalf of the insured. An interim payment of €50,000 is issued by the insurance company to pay for some clothes and Alternative Accommodation but the cheque is made payable to the insured and their bank and must be lodged to the bank account. The loss adjuster (on behalf of the insurer) issues a settlement proposal to Clearys totalling circa €260,000, following further negotiation between our team and the loss adjusters a final settlement proposal in the region of €290,000 is issued.
We meet with the insured to go over the final settlement and get their acceptance of the settlement proposals. A final settlement cheque is issued for circa €200,000. This figure is less the original €50,000 interim payment and a retention of €40,000 which is held by the insurer, this is standard procedure. When the insured goes to their bank to release the monies they are told that the settlement money will be released in stages subject to certification of expenditure by a qualified Architect or Engineer. €90,000 is released and the bank holds onto €110,000. This is despite of the fact that the outstanding mortgage value on the property is less than €50,000!!
The insured gets in touch with our team again to get assistance in having the bank release their settlement money. We present the bank with certification of over €170,000 in costs for building repairs. The matter is finally resolved some 7 months after the insurance company issued the cheque and a full 14 months after the fire.
When dealing with banks in cases like this we have found that they have no procedures in place for this type of instance and are generally uncooperative. Everything gets referred to head office and the insured cannot pursue the matter with their local branch – who have no authority to make any decisions in the current difficult banking circumstances.
Insured parties have enough to deal with in the event of a claim, their insurers and their banks need to have their client’s best interests at heart and stop adding further delays to what already is a long and complicated process. We hope that this post helps to shed a little light on this matter, if you have encountered similar difficulties leave a comment or get in touch on 1850 28 1850, we may be able to assist you.