Florida man got a nice ‘surprise’ when his insurer sent a $20K check to cover rental property damages from Hurricane Milton — but his bank refused to cash it. Here’s why he’s not alone

Why are banks holding up insurance checks?

Banks are cautious about releasing funds from insurance checks because they are often returned or disputed. The bank may also hold a vested interest in the property. In Razavi's case, TD Bank holds the mortgage. Mortgage lenders typically require proof that the insurance payouts are used for legitimate repairs.

TD Bank, for example, asks for notarized documentation detailing the planned repairs and sometimes requests a claims adjuster’s report. However, those documents can take weeks or even months to obtain due to the backlog created by disasters like Milton.

Industry expert Karyn Roeling of Seibert Insurance admitted that while documentation is a common request for large final claim payments, banks do not commonly require it for partial payments.

“I don't think it's right,” she told ABC reporters. “You would hope that the bank knows that a catastrophe has occurred in the area. You would think that somebody at the bank could make an exception to say, yes, our normal protocol is this but we're not going to follow normal protocol because this is an unprecedented two events, back-to-back.”

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What can homeowners do?

When one door closes, another opens and homeowners stuck waiting have several options. Filing a complaint with the state, which Razavi did, can sometimes pressure the banks to take quicker action. Florida residents should consider filing a complaint with the Florida Office of Financial Regulation or the Florida Attorney General's Consumer Protection Division. Calling your insurance company can also help, as they may be able to provide preliminary documentation or contact the bank on your behalf.

Consider contacting your bank directly, either by phone or in person, before attempting to deposit a check. They may be able to provide guidance on deposit requirements or offer additional resources. Leveraging additional lines of credit can be risky, but may help bridge the financial gap while homeowners wait for insurance funds to be released.

When you do start making repairs, ensure that you are keeping meticulous records of the damage and steps to repair it. The bank may need photos, videos, receipts and invoices for repair work or your adjuster. In some cases, hiring an independent insurance adjuster, who works on behalf of the property owner, can streamline the process.

When in doubt, it may be worth contacting your local news stations. Just two hours after ABC reporter Katie LaGrone contacted TD Bank, the bank deposited Razavi’s check.