When dealing with insurance companies, you can invoice separately for emergency loss mitigation services. Usually you can also be paid separately for these services. Since payment is everyone's favorite part of the process, the following is information on getting paid in a timely manner.

When referring to insurance policies, this article generally refers to the standard North American homeowners insurance policy. Some states have certain exclusions and riders particular to that state. When dealing with business, liability and National Flood Insurance, the rules are different and this information may not apply.

It is important to understand the components of a homeowner's insurance policy. Ask your insurance agent for a blank copy of the homeowner's insurance policy issued in your state. Most states have legislation requiring insurance policies to be written in easy to understand language.

This article focuses on the insurance contract and the obligations the insurer has in processing the money necessary to settle the claim, as well as the problems you may encounter. If handled properly, payment for emergency services can usually be collected quickly.

Property insurance policies have an assignment of benefits clause that obligates the insurance company to pay contractors having an interest in the loss repairs. In order to ensure the insurance company abides by this obligation, the contractor must submit the appropriate paperwork along with the invoice to the insurance company.

Traditionally, this paperwork is called the "work authorization." This form is actually two-in-one: a "work order" and "direct pay authorization." Your client is authorizing you to perform the services outlined in the agreement, and there is usually a clause authorizing the insurance company to exercise the assignment of benefits included in the insurance contract.

Many insurance companies will pay (and often very quickly) the mitigation contractor directly for emergency services. Some will issue a check that includes the contractor’s and insured’s names as co-payees. However, some insurance companies will not pay direct or include the contractor’s name on the check at all. Still others prefer to write only one check for the entire loss and unless you are contracting for the entire job, your money for emergency services can get lost in the system.

Dealing with challenges
The fact that some insurance companies will not pay directly—even though they have a contractual obligation—is a problem our industry has been dealing with for years.

If the insurance company won't pay directly for emergency services, you have two choices:

1. You can trust your client to pay you when they receive the insurance check. In most cases, your client will pay you and this becomes a non-issue.
2. You can collect the money from your client and have them seek reimbursement from the insurance company.

Mortgage companies
When dealing with insurance companies that prefer to package the payment into one check, you must deal with the mortgage company.

Since most of your clients co-own their property with a mortgage company and the mortgage company or bank is listed as an additional payee on the insurance contract, you will encounter the mortgage company from time to time.

As previously stated, most insurance companies will pay for emergency services separately. Many will pay you directly and quickly. Technically, the mortgage company should be listed as a co-payee on all checks issued for a loss as relates to the structure.

However, most insurance companies take a calculated risk on smaller losses and emergency services because they realize that there can be cash flow difficulties. When the check for your services has been issued and the mortgage company's name is on the check, certain procedures and paperwork must be handled.

You will often encounter this scenario when dealing with an independent adjuster. Independent adjusters often represent an out-of-town insurance company and those companies prefer to issue one check for the structural part of the claim.

The mortgage company may be willing to sign the check and return it if the loss is small. However, if substantial funds are involved, the mortgage company may require all other parties to endorse the check and allow the mortgage company to deposit the check in an escrow account.

The mortgage company will then propose a draw schedule so that the mortgagee can pay contractors as the work progresses. Often, the mortgage company will require you to submit a "contractor's affidavit and waiver of lien" to ensure you won't file a lien against the property if you are paid from the escrow account. If you ask the mortgage company what paperwork is required, they will provide you with the appropriate forms.

If you are not going to perform the structural repairs, you may often be the last person paid although you were the first to perform any services. To avoid this event, your best solution is to contact the mortgage company and advise them you have a claim against an insurance loss.

You will need the mortgagee's name and loan number. You can ask your client for this information or ask the adjuster. The information is included in the insurance policy. You should do this as early in the loss process as possible. The mortgage company will generally put your name and the insured's name on a check if you give written instructions to do so with your client's signature.

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