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Mortgage company withholding insurance proceeds
My question is, how do you rebuild a home, without the money to rebuild the home? I ignorantly thought that was why we paid for insurance. The reason that you have insurance is so as to keep the mortgage lender from losing money.  That's why you buy the insurance through the mortgage lender and they get paid.  Without the insurance, you'd have no home but still have a mortgage.  You'd either have to pay off a mortgage with no house or have to declare bankruptcy to shed the mortgage.   You essentially have two paths.  If you (or the builder/suppliers) can afford to float the cost, you can rebuild the original house.  You'll eventually get the $161,000 and can pay off the builder and suppliers.  This may involve taking out a construction mortgage to refinance the original mortgage.  Presumably the construction mortgage would be with a different lender.   The other path is that you can sell the existing property as is, and use the insurance and proceeds to pay off the existing mortgage.  Then you'd have no house and no mortgage.  You start over and buy a house with a mortgage.   It's possible that your insurance payoff isn't enough to pursue either path.  Then your option is to get the insurer to make a bigger payoff.  This may involve suing them.  Note that you may be able to talk the government into suing the insurer for you.  They do have regulators who can review things.  If you can't get government action, there are lawyers who will do the suing and take their fees out of their winnings.