How a loss draft process usually works

  1. Find the right department

    Call your servicer and ask for the insurance claims or loss draft department, not general customer service. Note the claim reference they give you.

  2. Get their requirements

    Servicers typically ask for the adjuster's estimate, a signed contractor agreement, the contractor's license and insurance documents, and a W-9.

  3. Endorse and send the check

    You endorse the check and send it as instructed. Ask for tracking and confirm receipt.

  4. Initial release

    Depending on the loan and amount, part of the funds may be released to start work.

  5. Inspections and draws

    Further releases often follow an inspection or a progress report showing work completed.

  6. Final release

    The remaining funds are released after completion, often with a final inspection and lien waivers.

Where delays usually come from

The most common holdups are missing paperwork, a check sent to the wrong address, and inspections that are requested late. Servicers also differ in how much they release at once, and rules can depend on whether the loan is current and what type of loan it is. Ask early so you can plan the contractor's payment schedule around the servicer's draw schedule rather than discovering the mismatch mid-job.

Supplement checks and recoverable depreciation payments may also include the lender's name, which restarts the process for that amount. Keep a log of every check, the date sent and the date released.

Questions to ask the loss draft department

  1. What documents do you need from me and from my contractor?
  2. How much will be released up front, and what triggers each later release?
  3. Who orders the progress inspections, and how long do they usually take to schedule?
  4. Can funds be paid directly to the contractor, or only to me?
  5. How will supplement and depreciation checks be handled?

Keep these together

  • Copies of every insurance check, front and back.
  • The servicer's claim reference and contact name.
  • Dates each check was mailed, received and released.
  • Contractor invoices matched to each release.

Common questions

My mortgage is paid off. Does any of this apply?

If there is no lien on the house, the check should be payable to you alone. If a paid-off lender still appears on the check, contact the insurer with proof the loan was released so the check can be reissued.

General information for Westminster, not a quote or professional advice. In an emergency, call 911.