A Fire, an Insurance Payout, and an Unexpected Fight With the Bank
When a fire tore through Antonina Gladkova's home in Georgetown, Ont. — a community in Halton Hills, about an hour outside Toronto — she thought the hardest part would be watching her house go up in flames. It turned out the harder fight came afterward, with her own mortgage lender.
Gladkova's insurance company approved the funds to rebuild her property. But instead of that money flowing directly and promptly to cover her contractor's invoices, her mortgage lender controlled the release of the funds — and didn't keep pace with the bills coming in. That left Gladkova personally on the hook for costly shortfalls just to keep her rebuild moving.
Why the Bank Gets a Say in Insurance Payouts
Few homeowners realize that when a mortgaged property suffers major damage, the insurance payout for repairs often doesn't go straight to the homeowner. Mortgage agreements frequently give lenders the right to hold and disburse fire or disaster insurance proceeds themselves, releasing funds in stages as rebuilding work is completed and verified. It's meant to protect the bank's interest in the property — but it can leave homeowners caught in the middle when the lender's timeline doesn't match a contractor's invoicing schedule.
For Gladkova, that gap wasn't just an inconvenience. She had to cover payments out of pocket to keep contractors working, even though the insurance money to cover those exact costs had already been approved and was sitting with her bank.
A Warning for Homeowners Across the Country
Gladkova is now urging other homeowners — in Ontario and across Canada — to read the fine print of their mortgage agreements before disaster strikes, not after. Knowing in advance whether your lender controls insurance disbursements, and how quickly they're required to release funds, can make the difference between a smooth rebuild and a financial squeeze during an already stressful time.
Consumer advocates note that these clauses are standard in most Canadian mortgage contracts, but the specifics — including timelines for releasing funds — vary widely between lenders. Homeowners dealing with a major loss are encouraged to ask their bank directly, in writing, how and when insurance funds tied to their mortgage will be released, and to keep detailed records of every invoice and disbursement request.
For now, Gladkova's rebuild is proceeding, but her experience is a reminder that even a fully insured loss can come with financial gaps that fall on the homeowner to bridge — unless they know to ask the right questions ahead of time.
Source: CBC News
