Abstract:
Methods of and systems for distributing insurance proceeds from an insurer are disclosed. Insurance proceeds may be distributed to a property owner and a party with a security interest in the property. In accordance with some embodiments, the methods general comprise the steps of determining the amount of insurance proceeds to pay, capturing banking information associated with the property owner, providing the insurance proceeds to the party with a security interest in the property, removing the amount of value the party with the security interest in the property is entitled to and providing the residual value to the property owner. Systems in accordance with some embodiments of the invention general comprise a data capture device configured to capture banking information associated with the property owner, and a processor configured to provide a potion of the insurance proceeds to a first banking institution associated with the party with a security interest in the property and configured to provide the residual insurance proceeds to a second banking institution associated with the property owner.

Description:
BACKGROUND 
       [0001]    The present invention is generally directed to systems and methods for the disbursement of insurance funds following a loss. More particularly, the present invention is related to an efficient manner of disbursing a portion of loss funds to a named loss payee and the residual value to the property owner. 
         [0002]    Insurance is often sought for coverage of property. This may be at the property owner&#39;s own volition, or at the behest of a party that has a secured interest in the property. For example, a mortgage company with a secured interest in a home may require a homeowner maintain a certain amount of insurance coverage. Similarly, a finance company that provides financing to a customer to purchase a vehicle may likewise require insurance coverage of the vehicle. 
         [0003]    In these situations, the party who has the secured interest is typically named as a “loss payee” on the insurance policy. In other words, should a loss occur, the secured party (e.g., mortgage company, financing company) will receive payment. After the amounts owed to the secured party are paid, the residual value may be distributed to the property owner (e.g., homeowner, vehicle owner). 
         [0004]    Loss payments issued by insurance companies are typically in the form of paper drafts, naming both the secured party and the property owner as co-payees. Therefore, endorsements from both parties are generally required before the draft may be settled. Efforts to streamline the process of providing loss checks directly to property owners have provided for more timely delivery of checks to the property owners, but there are often difficulties in the property owner obtaining the necessary endorsements from the secured party and receiving value. 
         [0005]    Presently, an insurance adjuster may issue a loss check to a property owner on-site in some situations. As discussed above, however, loss checks often name both the property owner and the secured party as co-payees. Accordingly, endorsements from both parties are required before settlement. If a property owner attempts to cash the loss check without the proper endorsement from the secured party, the transaction will be declined. A property owner must obtain the secured party&#39;s endorsement (e.g., by mailing the check to the secured party or by visiting the secured party&#39;s place of business) before cashing the loss check. 
         [0006]    Under financing agreements and other contractual obligations, the secured party typically has a first right to the loss funds to satisfy any outstanding debt related to the property. Therefore, the loss funds are typically distributed to the secured party, who provides a check representing the residual funds to the property owner. The property owner may now endorse this check and obtain payment. 
         [0007]    Complicating matters, is that in addition to funds intended to for property loss, insurers may additionally provide funds for other expenses. For example, in the case of a home being destroyed, an insurance company may provide funds designated as emergency living or housing expenses. In the case of a vehicle being destroyed, an insurance company may provide funds designated as covering transportation rental or other similar costs. In these types of situations, there may be an amount of funds that the secured party as a named loss payee is not entitled to. These funds, however may be tied up in the various transactions required for cashing a property loss check, and delay their delivery to the property owner. 
         [0008]    In summary, in the event of a property loss, a property owner must undertake multiple steps before receiving any funds related to the loss. In some circumstances, these funds may be necessary for immediate and emergency use. A property owner generally must (1) meet with an insurance adjuster who may provide a loss check on site, or may provide payment at a later date; (2) provide the property owner&#39;s endorsement; (3) either obtain the security party&#39;s endorsement, or mail the loss check to the security party named as a loss payee for its endorsement; (4) wait for the security party as named loss payee to take funds related to any outstanding debt on the property in question and obtain another check representing the residual value; and (5) cash the check representing the residual value. 
         [0009]    This process is inefficient, tedious, and under certain circumstances, prone to fraud and to unacceptable delays. In certain circumstances, the availability of banking institutions, postal service, and even telephone communication may be limited. For example, in the aftermath of the 2005 Hurricane Katrina that destroyed portions of the Gulf Coast, entire bank branches were destroyed and postal service was not effective. Property owners who obtained loss checks were forced to travel to an area where bank branches were functioning in order to obtain funds to support their families. However, because the security party&#39;s endorsement, as a named loss payees is necessary, these property owners were often turned away until such necessary endorsements were obtained. In such a situation, fraud is often prevalent in property owners forging the endorsements of other named loss payees (e.g., secured parties) in order to obtain much needed funds. 
         [0010]    In addition, as noted above, some insurance policies may provide for emergency living expenses in the event of a full property loss. Although these funds may be intended for the immediate use of the property owner, they are unobtainable until all endorsements are met and the above-described process is followed. 
         [0011]    Accordingly, it is desirable to provide systems and methods for providing more timely and more efficient payment of loss funds to both a property owner and a secured party. It is also desirable to provide such a system and method that reduces fraud. 
       SUMMARY OF THE INVENTION 
       [0012]    Aspects of the invention include methods of and systems for distributing insurance proceeds from an insurer are disclosed. Insurance proceeds may be distributed to a property owner and a party with a security interest in the property. In accordance with some embodiments, the methods general comprise the steps of determining the amount of insurance proceeds to pay, capturing banking information associated with the property owner, providing the insurance proceeds to the party with a security interest in the property, removing the amount of value the party with the security interest in the property is entitled to and providing the residual value to the property owner. Systems in accordance with some embodiments of the invention general comprise a data capture device configured to capture bank information associated with the property owner, and a processor configured to provide a potion of the insurance proceeds to a first banking institution associated with the party with a security interest in the property and configured to provide the residual insurance proceeds to a second banking institution associated with the property owner. 
         [0013]    It is to be understood that both the foregoing general description and the following detailed description are exemplary and explanatory only, and are not restrictive of the invention as claimed. The accompanying drawings constitute a part of the specification, illustrate certain embodiments of the invention and, together with the detailed description, serve to explain the principles of the invention. 
     
    
     
       DESCRIPTION OF THE DRAWINGS 
         [0014]    In order to assist in the understanding of the invention, reference will now be made to the appended drawings, in which like reference characters refer to like elements. The drawings are exemplary only, and should not be construed as limiting the invention. 
           [0015]      FIG. 1  is a block diagram of a system in accordance with some embodiments of the present invention. 
           [0016]      FIG. 2  is a block diagram of a system in accordance with some embodiments of the present invention. 
           [0017]      FIG. 3  is a block diagram of a system in accordance with some embodiments of the present invention. 
           [0018]      FIG. 4  is a block diagram of a system in accordance with some embodiments of the present invention. 
           [0019]      FIG. 5  is a block diagram of a system in accordance with some embodiments of the present invention. 
           [0020]      FIG. 6  is a schematic diagram of a handheld device in accordance with some embodiments of the present invention. 
           [0021]      FIG. 7  is a flow-chart depicting a method in accordance with some embodiments of the present invention. 
       
    
    
     DETAILED DESCRIPTION OF THE INVENTION 
       [0022]    Some embodiments of the present invention are illustrated in  FIG. 1 , and provide a system  10  for electronic communications between an insurance company  110 , a secured party  120 , and a property owner  130 . The secured party  120  may be any entity that possesses an interest in the property insured (e.g., a mortgagor, a finance company, etc.). The secured party  120  may be named the loss payee on the insurance agreement. The property owner  130  may be any person or entity who possesses the property at issue, and who also may be entitled to insurance proceeds following a loss. The property owner  130  may also be entitled to additional benefits, such as emergency living or temporary housing expenses, which are discussed in more detail below. It is to be understood that financial transactions that occur between these parties (the insurance company, the secured party, and the property owner) may occur at the parties&#39; respective banking institutions. In  FIG. 1 , however, for ease of understanding, financial transfers are illustrated as occurring directly between the parties. 
         [0023]    When the insurance company  110  determines that insurance proceeds are to be paid, the insurance company  110  may request or otherwise capture information regarding the property owner&#39;s banking institution  130 . The insurance company  110  may then provide payment directly to the secured party  120  and may pass along the captured banking information of the property owner  130 . The secured party  120  may then provide any residual funds (funds left after the mortgage or other outstanding debt is satisfied) directly to the property owner&#39;s banking institution  130 . In his manner, the property owner  130  may have quick access to the loss funds. 
         [0024]    In general, the systems and methods in accordance with some embodiments of the present invention may be characterized by the relationship between the insurance company, the secured party, and the property owner. These relationships are discussed below in terms of financial institutions. In other words, there may be four (4) distinct scenarios. In each scenario, various communications and transactions in the prior art may be eliminated and streamlined, resulting in a property owner receiving insurance proceeds in an expedited manner, obtaining efficiencies in supporting the insurance companies&#39; disbursement operations, and in improving the mortgage companies recovery operations. Each scenario is discussed in more detail below. In a first scenario, and that illustrated in  FIG. 2 , is a system  20  in which the insurance company  210  uses the same banking institution as the secured party  220  and the property owner  230 . In other words, a single banking institution  250  may comprise an account of the insurance company  251 , an account of the secured party  252 , and an account of the property owner  253 . 
         [0025]    In such a situation, loss payments may be withdrawn from the insurance company&#39;s account  251  and transferred to the secured party&#39;s account  252 . The amount necessary to satisfy the security interest (e.g., mortgage) may be taken, and any residual value may then be transferred to the property owner&#39;s account  253 . In this manner, in a brief period of time all parties may have the funds to which they are entitled. By utilizing electronic transfers, manual transactions and trips to traditional “brick-and-mortar” banking institutions may be avoided. 
         [0026]    A second scenario, and that illustrated in  FIG. 3  is a system  30  in which the insurance company  310  and property owner  330  may use a first banking institution  350 , and where the secured party may use a second banking institution  360 . The first banking institution  350  may comprise the insurance company&#39;s account  351  and the property owner&#39;s account  353 . The second banking institution  360  may comprise the secured party&#39;s account  362 . In this situation, depicted in  FIG. 3 , value transfers from the insurance company  310  to the secured party  320  may be between the insurance company&#39;s account  351  to the secured party&#39;s account  362 . The secured party  320  may remove the amount of funds it is entitled to, and provide any residual value to the property owners&#39; account  353 . It is contemplated that if the insurance company  310  is aware of the respective amounts due to the secured party  320  and the property owner  330 , the insurance company  310  may provide these amounts to both parties directly, rather than waiting for the secured party  320  to remove its funds and convey any residual value to the property owner  330 . 
         [0027]    A third scenario, and that illustrated in  FIG. 4  may be a system  40  in which an insurance company  410  and a secured party  420  have accounts  451 ,  452  respectively, at a first banking institution  450 , and a property owner  430  has an account  463  at a second banking institution  460 . In this system  40 , insurance loss proceeds may be transferred from the insurance company&#39;s account  451  to the secured party&#39;s account  452  at the first banking institution  450 . Residual value may be transferred to the property owner&#39;s account  463  at the second banking institution  460 . It is again contemplated that if the insurance company  410  is aware of the respective amounts due to the secured party  420  and the property owner  3430 , the insurance company  410  may provide these amounts to both parties directly, rather than waiting for the secured party  420  to remove its funds and convey the remained to the property owner  430 . 
         [0028]    Finally, a fourth scenario, and that illustrated by  FIG. 5 , may be a system  50  in which an insurance company  510  may have an account  551  at a first banking institution  550 , a secured party  520  may have an account  562  at a second banking institution  560  and a property owner  530  may have an account  573  at a third banking institution  570 . The insurance company  510  may transfer value from its account  551  to the secured party&#39;s account  561 . The secured party  520  may then transfers any residual value to the property owner&#39;s account  573 , where the property owner  530  may have immediate access to the value. 
         [0029]    In order to expedite the transfer of value between parties, it is contemplated that such transfers be accomplished through electronic funds transfer systems, as known in the art, or by substitute checks, as also known in the art. 
         [0030]    As noted above, it is commonplace for loss checks to name both property owner and the secured party as co-payees. Therefore, it may be necessary to obtain an endorsement from the property owner. In situations where the secured party and the property owner&#39;s banking institution are the same entity, it should be noted that under present banking laws, a bank may provide the endorsement of its customer. Therefore, provided that the bank has authorization (either at the time of the transactions or previously, such as in the financing agreement) the necessary property owner endorsement can be supplied. In the scenarios discussed above where the secured party and the banking institution are not the same entity, the property owner&#39;s endorsement may be supplied during the initial information capture of the property owner&#39;s banking institution, or may be supplied through other means. Other means may include through the use of a substitute check, or through other contractual agreements between the property owner, the secured party, and/or the banking institution. 
         [0031]    With reference to  FIG. 6 , in order to additionally expedite the transfer of value between parties, a handheld device  610  may be utilized. The handheld device  610  may be used by an insurance agent or adjuster employed by an insurance company  620 . The handheld device  610  may be in communication with the insurance company  620  when the insurance agent or adjuster is in the field. Such communication may be wireless, and may utilize mobile technology, including but not limited to cellular and satellite technology. The handheld device  610  may also provide communications to the insurance company  620  via land-lines if more convenient. 
         [0032]    The handheld device  610  may comprise numerous data input devices, such as but not limited to a keyboard  611  and/or a machine reader  612 . The machine reader  612  may be an optical scanner, magnetic stripe reader, and/or bar code reader. 
         [0033]    The handheld device  610  may be used by an insurance agent or adjuster for several reasons. The handheld device  610  may provide calculation tools that are necessary or useful for an insurance agent or adjuster in determining the amount of loss that is applicable to a particular claim. Upon determining the amount of loss payments a property owner may be entitled to, the insurance agent or adjuster may capture or otherwise input information relating to the property owner&#39;s banking institution (e.g., routing numbers, account numbers, etc.). This information may be entered into the handheld device  610  via any of the data input devices  611 ,  612 . For example, a routing number and account number may be manually entered via the keyboard  611 . Alternatively, the property owner&#39;s account information may be captured by swiping a debit card relating to the property owner&#39;s account through a magnetic stripe reader. Alternatively still, the property owner&#39;s account information may be captured through an optical recognition device, for example by scanning a cancelled check or a recent statement of the property owner&#39;s banking institution. 
         [0034]    In situations where the relationships between the insurance company, the secured party, and the property owner require additional endorsements of the property owner, the handheld device  610  may include a means for capturing this signature, either physically or electronically. 
         [0035]    Once the necessary information is captured by the handheld device  610  (e.g., the loss payment amount, the banking institution information of the property owner, the property owner&#39;s endorsement), such information may be conveyed to the insurance company  620  electronically. In this manner, the insurance company  620  may disburse loss funds in near real-time to a property owner and/or other named loss payee. The insurance company  620  may disburse funds through electronic transfer. Automated Clearing House transfers, or by issuing a file of images that can be used to generate substitute checks 
         [0036]    Variations and multiple embodiments of the invention are possible. For example, substitute checks (e.g., files which, when printed, result in negotiable instruments) may be used in lieu of electronic transfer or ACH transfers. 
         [0037]    As noted above, during particular circumstances and/or insurance claims, funds in addition to those representing property loss may be provided to a property owner. For example, should a complete home loss occur, an insurance policy may provide for emergency living expenses. These are funds which the secured party, as a named loss payee, is not entitled to; rather these funds are solely intended for the immediate use of the property owner. Accordingly, it is contemplated that funds designated as other than property loss value may be transferred directly from the insurance company to the property owner. A notice of such transfer may be provided to the secured party. Alternatively, funds designated as other than property loss value may immediately and automatically pass through the secured party&#39;s banking institution, such that the secured party can not and does not remove any value from the amount. 
         [0038]    However, in certain circumstances funds intended solely for the property owner emergency living expenses) may not be specially designated, but may be part of the overall insurance claim payment. In order to provide necessary and timely delivery of such emergency funds, a threshold calculation may be employed. In such a threshold calculation, the insurance company may provide a single payment comprising both property loss value and emergency living expenses (or other such funds intended solely for the property owner) to a secured party. The secured party may immediately convey a portion of the single payment to the property owner. The portion may be an amount that falls under a pre-set threshold (for example, funds up to $10,000 may be immediately conveyed to a property owner following a full property loss). Alternatively, the portion may be a pre-set percentage of the total property loss value (e.g., 10%). Alternatively still, the portion may be a combination of these approaches, such that the property owner may be immediately conveyed 10% of the property loss value, up to $10,000. 
         [0039]    With reference to  FIG. 7 , a method  70  in accordance with some embodiments of the present invention will now be discussed. At step  701 , a loss of property insured by an insurance company  710  and with a named loss payee  720  in addition to a property owner  730  occurs. The loss may be any type of property (e.g., a home, a car, a business, etc.). At step  711  the insurance company may determine the amount of payment that the property owner  730  and secured party are entitled to recover. Step  711  may be done by an insurance agent, employee, or adjuster in the field. 
         [0040]    At step  712 , the banking information of the property owner  730  may be captured. Such information capture may occur in the field through the use of a handheld device, as described above, or may occur through the property owner  730  providing such information directly to the insurance company  710  (e.g., verbal communication via the telephone, written communication via facsimile, etc.). Additionally, any necessary endorsements of the property owner may also be captured at step  712 . Such endorsements may be recorded physically or electronically. Such endorsements may or may not be on a substitute check. 
         [0041]    At step  713  the information regarding the property owner&#39;s banking institution may be conveyed to the insurance company  710 . If the information regarding the property owner&#39;s banking institution was provided directly to the insurance company  710  rather than to an insurance agent, employee, or adjuster in the field, this step may be omitted. 
         [0042]    At step  714  the insurance company  710  determines its final payment due to the property owner  730  and secured party (as named loss payee)  720 . The final payment may include funds intended for purposes other than property loss value. For example, funds may be intended for emergency or temporary housing expenses (in the case of a full home loss) or intended for automobile rental (in the case of full automobile loss). The insurance company  710  may then convey the funds to the secured party  720 . It is to be understood that the insurance company  710  may instruct its banking institution to transfer funds from its account to an account of the secured party  720 . Such a transfer may be internal (where the insurance company and secured party both use the same banking institution, or where the secured party and the banking institution used by the insurance company are the same entity) or may be external (where the insurance company and the secured party use different bank institutions, or where the secured party is the same entity as a banking institution different than that used by the insurance company). 
         [0043]    Note that at optional step  715 , the insurance company  710  may convey funds intended for purposes other than property loss value (e.g., emergency or temporary living expenses) directly to the property owner  730 . 
         [0044]    At step  721  the secured party  720  may receive the funds representing the loss amount and any additional funds intended for purposes other than property loss value from the insurance company  710 . At step  722  the secured party  720  may deposit the amount of the insurance payment that the secured party  720  is entitled to. The amounts that the secured party  720  is entitled to may be, but is not limited to, the amount that the property owner  730  is indebted to the secured party  720 . 
         [0045]    At step  723  the secured party  720  may convey any residual funds, or funds intended for purposes other than property loss value, to the property owner. Such a transfer may be internal (where the secured party and property owner both use the same banking institution, or where the secured party and the banking institution used by the property owner are the same entity) or may be external (where the secured party and property owner use different banking institutions, or where the secured party is the same entity as a banking institution different than that used by the property owner). 
         [0046]    At optional step  724 , funds designated as intended for purposes other than property loss value may be conveyed directly to the property owner  730 . Alternatively, a portion of the value of the property loss value may be immediately conveyed to the property owner  730 . This step may be an option that could be utilized in times of crisis. 
         [0047]    At step  731  the property owner  730  receives the residual funds from the secured party  720 , as well as any funds intended for purposes other than property loss value. The property owner  730  may optionally receive such funds intended for purposes other than property loss directly from the insurance company  710 . The property owner  730  may receive these funds in the form of an automatic deposit into the property owner&#39;s banking institution, information of which was captured in step  712  by the insurance company. 
         [0048]    At step  799 , the property owner  730  has full and immediate access to funds that the property owner  730  is rightfully entitled to in full, the secured party  720  having previously removed the portion of the funds to which it was entitled to. 
         [0049]    The embodiments of the present invention are not to be limited in scope by the specific embodiments described herein. For example, although the discussion above primarily discusses a single insurance company, a single secured party, and a single property owner, the present invention is to cover multiple parties. For example, insurance coverage may be provided by two carriers (e.g., a direct policy carrier, and umbrella coverage). Property may similarly be have more than one party with a security interest therein (e.g., a first mortgage and a second mortgage). And property may have multiple owners (e.g., tenants in common, joint tenants). 
         [0050]    Indeed, various modifications of the embodiments of the present inventions, in addition to those described herein, will be apparent to those of ordinary skill in the art from the foregoing description and accompanying drawings. Thus, such modifications are intended to fall within the scope of the following appended claims. Further, although some embodiments of the present inventions have been described herein in the context of a particular implementation in a particular environment for a particular purpose, those of ordinary skill in the art will recognize that its usefulness is not limited thereto and that the embodiments of the present inventions can be beneficially implemented in any number of environments for any number of purposes. 
         [0051]    Accordingly, the claims set forth below should be construed in view of the full breadth and spirit of the embodiments of the present inventions as disclosed herein.