Insurance Claims Processing

At Texas General Constructors, we are staffed with professionals to ensure your Insurance claim goes forward both smoothly and fairly. We realize that our customers do not work with insurance claims on a regular basis and that sometimes the process can be confusing. We pride ourselves in helping our customers make sense of both their rights under Texas law and the full benefits  they are entitled to.

Please refer to our Insurance Claims FAQs for more information.

Mortgage Company Endorsement

If like most of us, you have a mortgage on your home and your mortgage company will likely be listed on your insurance check as a co-payee. This is completely normal and in most cases requires a simple endorsement from your mortgage company so that you may deposit your check. Some mortgage institutions require paperwork to be filled out before they will endorse your insurance check. This may include affidavits of completion of work signed by your contractor and/or copies of contracts, your insurance claim summary, etc. At Texas General Constructors we work with mortgage companies on a daily basis and will be pleased to walk you through the process and assist you in obtaining the necessary endorsements.

It is important that you know your rights under Texas law and that you don’t allow your mortgage company to hold your insurance monies hostage. Below you’ll find helpful information regarding Texas laws and Insurance codes pertaining to your mortgage company’s endorsement.

2009 Texas Code

INSURANCE CODE

TITLE 5. PROTECTION OF CONSUMER INTERESTS

CHAPTER 557. INSURED PROPERTY SUBJECT TO SECURITY INTEREST INSURANCE CODE

TITLE 5. PROTECTION OF CONSUMER INTERESTS

SUBTITLE C. DECEPTIVE, UNFAIR, AND PROHIBITED PRACTICES

CHAPTER 557.INSURED PROPERTY SUBJECT TO SECURITY INTEREST

SUBCHAPTER A. INSURANCE PROCEEDS HELD BY LENDER PENDING REPAIR OF RESIDENTIAL REAL PROPERTY

Sec. 557.001. DEFINITIONS. In this subchapter:

• (1) “Lender” means a person holding a mortgage, lien, deed of trust, or other security interest in property.
• (2) “Residential real property” means:
  • (a) a single-family house;
  • (b) a duplex, triplex, or quadraplex; or
  • (c) a unit in a multi-unit residential structure in which title to an individual unit is transferred to the owner of the unit under a condominium or cooperative system.
  • Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,2005.

Sec. 557.002. NOTIFICATION BY LENDER TO INSURED CONCERNING INSURANCE PROCEEDS.

• (a) If a claim under an insurance policy for damage to residential real property is paid to the insured and a lender, and the lender holds all or part of the proceeds from the insurance claim payment pending completion of all or part of the repairs to the property, the lender shall notify the insured of each requirement with which the insured must comply for the lender to release the insurance proceeds.
• (b) The notice required under this section must be provided not later than the 10th day after the date the lender receives payment of the insurance proceeds.
• Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 557.003. LENDER’S RELEASE OR REFUSAL TO RELEASE INSURANCE PROCEEDS.

Not later than the 10th day after the date a lender receives from the insured a request for release of all or part of the insurance proceeds held by the lender, the lender shall:

• (a) if the lender has received sufficient evidence of the insured’s compliance with the requirements specified by the lender under Section 557.002 for release of the proceeds, release to the insured, as requested, all or part of the proceeds; or
• (b) provide notice to the insured that explains specifically:
  • (a) the reason for the lender’s refusal to release the proceeds to the insured; and
  • (b) each requirement with which the insured must comply for the lender to release the proceeds.
  • Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005

Sec. 557.004. PAYMENT OF INTEREST; RATE.

A lender who fails to provide notice as required by Section 557.002 or 557.003 or torelease insurance proceeds as required by Section 557.003 shall pay to the insured interest at the rate of 10 percent a year on the proceeds held by the lender.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005

Sec. 557.005. ACCRUAL OF INTEREST.

• (a) If a lender fails to provide notice as required by Section 557.002 or 557.003, interest begins to accrue on the date the lender received the insurance proceeds.
• (b) If a lender fails to release insurance proceeds as required by Section 557.003, interest begins to accrue on the date the lender receives sufficient evidence of the insured’s compliance with the requirements specified by the lender under Section 557.002 or 557.003 for release of the proceeds.
• (c) Interest stops accruing on the date the lender complies with Section 557.002 or 557.003, as applicable.
• Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005

Sec. 557.006. INTEREST NOT REQUIRED ON INSURANCE PROCEEDS APPLIED TO REDUCE NOTE.

A lender is not required to pay interest on insurance proceeds applied, in accordance with the terms and conditions of a deed of trust or other security agreement, to reduce a note.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER B. LIENHOLDER APPROVAL OF INSURANCE CLAIM PAYMENT RELATING TO PERSONAL PROPERTY

Sec. 557.051. LIENHOLDER APPROVAL OF PAYMENT.

If payment of an insurance claim relating to personal property requires the endorsement of a check or draft by a holder of a lien on the property or otherwise requires approval of the lienholder, not later than the 14th business day after the date the lienholder receives a request for the endorsement or other approval, the lienholder shall provide: (1) the endorsement or approval; or (2) a written statement of the reason for denial of the endorsement or approval to the person who requested the endorsement or approval.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,2005.

Sec. 557.052. CIVIL PENALTY.

• (a) A lienholder who violates Section 557.051 is liable for a civil penalty not to exceed $500 for each violation.
• (b) The attorney general may bring an action to collect a civil penalty under this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005

Disclaimer: These codes may not be the most recent version. Texas may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.