Advance Payments and Partial Payments: Your Right to Money Before the Claim Is Resolved

You have a covered loss. Your home is damaged or destroyed. You need money now — not in three months, not after the carrier has completed its investigation, not after six rounds of supplemental estimates. You need money to secure temporary housing, begin emergency repairs, replace essential belongings, and keep your life from unraveling while the insurance company takes its time processing paperwork.

This is exactly the scenario insurance was designed for. You paid premiums for years, and the implicit promise was that when disaster struck, the carrier would be there with financial support when you needed it most. But the reality of modern claims handling is far more complicated. The days when a field adjuster could exercise discretion and cut a check to help a displaced family get back on its feet are largely over. What replaced that system is a bureaucratic process designed around precision, documentation, and delay — a process that often leaves policyholders waiting for money they desperately need while the carrier methodically determines the exact amount it believes is owed.

This article examines the critical distinction between advance payments, partial payments, and undisputed-amount payments. It explains the legal framework that governs when carriers must pay before a claim is fully resolved, the historical shift that changed how carriers approach early payments, and the practical strategies you can use to get money flowing when you need it.

What Are Advance Payments?

An advance payment is money the insurance company pays you before the final amount of the claim has been determined. It is not a settlement. It is not a final payment. It is money issued against the anticipated total, meant to bridge the gap between the date of loss and the date the carrier eventually calculates its final number. Think of it as a draw against what the carrier expects it will owe.

Advance payments serve a critical function in catastrophic losses. When a family is displaced by a fire, they cannot wait eight weeks for the carrier to complete its estimate before they secure a rental. When a business suffers major water damage, the owner cannot wait three months for the carrier to finalize the building estimate before starting demolition and drying. The purpose of an advance is to get money into the hands of the insured quickly enough that the coverage actually does what it is supposed to do — help the policyholder recover.

Advance payments are typically issued as checks that are later credited against the total claim payment. If the carrier advances $15,000 and later determines that the total claim is $85,000, the remaining payment would be $70,000 (minus any deductible not already applied). The advance is not “extra” money — it is money you were going to receive anyway, paid earlier because the circumstances demanded it.

The Difference Between Advance Payments and Partial Payments

These two terms are often used interchangeably, but they are not identical, and the distinction matters.

An advance paymentis issued before the carrier has completed its investigation and determined the amount owed. The carrier does not yet have a final number. It is paying an estimated amount in anticipation of a larger payment to follow. Advances are inherently imprecise — the carrier is acknowledging that it does not know the exact total yet, but it knows enough to pay something now.

A partial payment is issued after the carrier has calculated a specific amount that it believes is owed. The carrier may have completed its estimate and determined that $50,000 is owed under the building coverage, but it is issuing only $30,000 because the remaining $20,000 is being held as recoverable depreciation until repairs are completed. Or the carrier may be issuing a partial payment on one coverage (like the building) while it continues to investigate another coverage (like contents or ALE). Either way, the carrier has reached a conclusion about at least part of the claim and is paying based on that conclusion.

The distinction matters because of how each type of payment relates to the carrier's obligations. Partial payments on determined amounts are governed by specific timing requirements under California's Fair Claims regulations. Advance payments operate in a different space — one where the carrier has not yet reached a final determination but may still be obligated to pay based on what is already known.

The Historical Shift: How Carriers Used to Handle Advances

Understanding how advance payments used to work is essential to understanding why the current system is so frustrating for policyholders. The shift was not accidental. It was strategic.

The Era of Generous Advances

It used to be far more common for insurance companies to issue substantial advance payments early in the claim process. Not long ago — within the last ten to fifteen years — a field adjuster who responded to a fire loss might issue a $10,000 or $20,000 advance check within days of the loss, well before any formal estimate was prepared. The adjuster had the authority and discretion to assess the situation, recognize that the insured needed money, and issue a check on the spot.

This was not charity. It was a deliberate claims-handling strategy, and it was taught by consultants who advised insurance companies on how to manage their claims operations. The theory behind generous advances was straightforward and, from the carrier's perspective, remarkably effective.

The reasoning went like this: a policyholder who receives a significant advance early in the claim process feels relieved. The immediate financial pressure is reduced. The policyholder feels that the insurance company is taking care of them. That sense of goodwill and relief makes the insured far less likely to hire a public adjuster or an attorney. The policyholder thinks, “They sent me a check right away — they must be handling this fairly.”

The advance also made the insured more cooperative with the rest of the claims process. A policyholder who has received $15,000 within the first week is more patient, more willing to provide documentation, more willing to accept the adjuster's timeline, and less likely to become adversarial. The advance created a dynamic where the insured felt grateful — and grateful policyholders are easier to manage.

Here is the part that matters most: consultants who advised this strategy were explicit that generous advances would help carriers pay less money in the long run. The advance was not a path to a fair outcome — it was a path to a compliant insured. Policyholders who received early advances were statistically less likely to challenge lowball estimates, less likely to engage professionals to review the carrier's scope and pricing, and less likely to push back on depreciation calculations. The $15,000 advance might cost the carrier nothing in the end (it was deducted from the final payment anyway), but the goodwill it purchased saved the carrier tens of thousands of dollars in claims that went unchallenged.

There is something deeply instructive about this history. The same industry that now insists it cannot issue a single dollar before completing a thorough investigation used to hand out substantial advances as a deliberate tactic to reduce overall claim costs. The carrier was not paying early because it was generous. It was paying early because it was shrewd. The advance was an investment in policyholder compliance.

What Changed

Over the last decade, the insurance industry appears to have moved away from this approach. The era of the field adjuster with discretion and authority to issue meaningful advances has been replaced by a system in which no money moves until a bureaucratic process has been completed. The adjuster on the ground may see a family living in their car, may understand perfectly well that $30,000 in ALE is inevitable, and may want to issue an advance — but they no longer have the authority to do so. The decision is made at a desk, by someone who has never visited the property, after a process that takes weeks or months.

The carrier now insists on determining a precise number before issuing any payment at all. The first check arrives not as an advance but as a calculated payment based on a preliminary estimate. That preliminary estimate may itself be preliminary — subject to supplements and revisions — but the carrier treats it as a floor below which it will not pay until it has done its own analysis.

What this means in practice is that the policyholder receives nothing during the most critical phase of the claim: the first weeks after the loss, when emergency spending is highest, when temporary housing must be secured, when decisions about mitigation and temporary repairs must be made immediately. The carrier has replaced a system that was designed to keep the insured cooperative with a system that offers nothing until its own process is complete.

It is worth asking why the industry abandoned a strategy that, by its own consultants' analysis, saved money in the long run. One possible explanation is that the rise of professional representation — public adjusters and policyholder attorneys — has changed the calculus. If advances no longer prevent policyholders from hiring professionals (because more policyholders now know to hire professionals regardless), the advance no longer serves its purpose as a compliance tool. Another possibility is that the shift reflects a broader industry move toward centralized claims processing, where individual adjuster discretion has been systematically eliminated in favor of standardized workflows that prioritize consistency and cost control over responsiveness.

Whatever the reason, the result is the same: policyholders today are far less likely to receive advance payments than they were a decade ago, and the consequences fall entirely on the people who can least afford to wait.

The Legal Obligation to Pay Undisputed Amounts

Regardless of whether a carrier chooses to issue advances, California law creates a separate and independent obligation that functions like a mandatory advance payment in many situations. This is the duty to pay undisputed amounts promptly, even while disputed amounts are still being negotiated.

10 CCR §2695.7(h): The Undisputed-Amount Rule

Section 2695.7(h) of the California Code of Regulations (Title 10) is one of the most important and most frequently violated provisions in California's Fair Claims Settlement Practices regulations. It provides, in essence, that when a claim has both disputed and undisputed components, the insurer must pay the undisputed amount without delay, even if the disputed portion is still being negotiated.

Here is why this matters: in the vast majority of first-party property claims, there is some amount that is clearly owed even if the total is in dispute. The carrier and the policyholder may disagree about whether the claim is worth $80,000 or $120,000, but neither side disputes that it is worth at least $80,000. Under Section 2695.7(h), the carrier must pay that $80,000 promptly — it cannot hold the entire payment hostage while it negotiates about the remaining $40,000.

This rule creates what is functionally an advance payment mechanism, even in situations where the carrier is not voluntarily issuing advances. The carrier does not have the option to withhold all payment until it has resolved every dispute. If any portion of the claim is undisputed, that portion must be paid now.

In practice, carriers violate this requirement constantly. They present a take-it-or-leave-it number and refuse to issue any payment until the insured agrees to the total. Or they condition payment on the insured signing a release or accepting the estimate as final. Or they simply claim that the entire amount is “in dispute” because the insured has challenged the estimate — a position that conflates a dispute over the total with a dispute over every dollar. The undisputed-amount rule is clear: the carrier must pay what is not in dispute, regardless of what is in dispute.

How to Invoke the Undisputed-Amount Rule

Invoking this rule requires precision. You cannot simply tell the carrier “pay me something.” You need to frame your demand in terms the regulation supports:

• Identify the undisputed amount specifically.If the carrier's own estimate says $52,000 and your estimate says $87,000, the undisputed amount is $52,000. The carrier has already determined that $52,000 is owed. Demand payment of the carrier's own number immediately, while reserving your right to dispute the difference.
• Cite the regulation by number.Reference 10 CCR §2695.7(h) specifically in your written demand. This puts the carrier on notice that you know the rule and that any continued withholding may constitute an unfair claims practice.
• Make clear that accepting payment is not accepting the total.State explicitly that your acceptance of the undisputed amount does not constitute agreement with the carrier's estimate and that you reserve all rights to pursue the disputed balance. See our article on insurance checks for how to handle restrictive language on payments.
• Follow up in writing if payment is not forthcoming. If the carrier does not pay the undisputed amount within 30 days of your demand, document the delay. This delay is itself a potential bad faith violation — the carrier is now withholding money it has determined is owed, without any coverage dispute to justify the withholding.

The ALE Advance: A Case Study in Why Advances Matter

Nowhere is the advance payment issue more urgent — or more frequently mishandled — than in Additional Living Expenses (ALE) coverage. ALE is the coverage that pays for temporary housing and increased living costs when a covered loss renders your home uninhabitable. It is, by its nature, a coverage that requires money upfront.

The Reimbursement Paradox

Many policies describe ALE as a reimbursement for expenses “incurred” by the insured. Carriers seize on this language to argue that ALE is strictly a reimbursement benefit — meaning the insured must first spend the money and then submit receipts for reimbursement. They refuse to advance any ALE funds until the insured has already paid rent, hotel bills, or other housing costs out of pocket.

The practical absurdity of this position is obvious. A homeowner whose house has just burned down needs first month's rent, last month's rent, and a security deposit to secure a temporary apartment. Everyone involved in the claim — the adjuster, the examiner, the carrier's management — knows that this policyholder is going to have $30,000 or more in rental costs over the coming year because reconstruction will take that long. The ultimate ALE obligation is not in dispute. Yet the carrier refuses to advance the $6,000 or $8,000 the insured needs right now to secure the rental, insisting instead that the insured must first find the money somewhere, pay the landlord, obtain a receipt, submit the receipt, wait for it to be processed, and then receive reimbursement.

For a family that has just lost its home — along with many of the financial resources that home represented — this position is not just bureaucratic. It renders the coverage inaccessible. The insured cannot “incur” the cost because they do not have the money to incur it. The coverage exists precisely for this situation, yet the carrier's interpretation of “incurred” means the coverage is available only to people who do not need it — people who can afford to front the money and wait to be reimbursed.

Why the Reimbursement Position Is Often Wrong

Like many disputes in insurance claims, the reimbursement question ultimately comes down to reasonableness. Even if the policy language can be read to support a reimbursement-only interpretation, the carrier's duty of good faith and fair dealing imposes a standard of reasonableness on every aspect of claims handling. Is it reasonable for the carrier to insist that the insured rent a place — knowing the insured has no money to do so — and then submit a receipt for reimbursement, when the rental advance is a fraction of the total ALE that everyone agrees will be owed over the course of the claim?

The answer, in any common-sense analysis, is no. An insurer that acknowledges a loss has rendered the home uninhabitable, that acknowledges ALE coverage applies, and that can reasonably estimate the displacement period has no good-faith basis for refusing to advance ALE. The policy language may use the word “incurred,” but the implied covenant of good faith and fair dealing does not permit the carrier to interpret that language in a way that makes the coverage practically unavailable to the insured.

Attorney Chip Merlin of Merlin Law Group has written extensively about how the failure to advance ALE payments can itself constitute bad faith. The analysis is straightforward: the carrier knows the insured needs housing, knows housing costs money upfront, knows the insured cannot access those funds without the carrier's payment, and refuses to pay. That refusal is not a neutral policy interpretation — it is a claims-handling decision that prioritizes the carrier's cash flow over the insured's immediate needs, in a context where the carrier has already collected years of premiums to cover exactly this risk.

California's Declared-Disaster Advance Requirements

California has addressed the ALE advance issue directly for declared disasters. Under California Insurance Code §2061(a), when a total loss results from a declared state of emergency, the insurer must advance no less than four months of ALE upon the insured's request. The insured does not need to submit receipts first. The insured does not need to prove what they have “incurred.” The advance is mandatory.

This statutory requirement exists because the legislature recognized the absurdity of the reimbursement-only position in disaster situations. But note the limitation: this requirement applies specifically to total losses in declared disasters. For partial losses, for non-disaster claims, and for losses in states without similar statutes, the advance payment battle often must be fought on the grounds of good faith and the undisputed-amount regulation.

For a detailed discussion of the specific California statutory requirements, including CDI Bulletin 2025-2 and SB 872, see our companion articles on ALE and Fair Rental Value and recoverable depreciation deadlines.

Why Carriers Resist Paying Early

Understanding the carrier's motivations for resisting advance payments helps policyholders counter the arguments they will encounter. The carrier's stated reasons are rarely the real ones.

The Stated Reasons

Carriers typically offer some version of these justifications for not paying advances:

• “We need to complete our investigation.” The carrier says it cannot pay until it knows the exact amount owed. This sounds reasonable in the abstract, but it ignores the fact that the carrier does not need to know the exact total to know that a significant amount is clearly owed. An investigation may determine whether the claim is $60,000 or $90,000, but no investigation is needed to determine that a family whose home burned down needs housing money now.
• “We might overpay.” The carrier argues that issuing advances creates a risk of overpayment if the final total turns out to be lower than the advance. In practice, this risk is trivially small in most catastrophic losses. A $10,000 advance on a fire claim that will obviously exceed $100,000 does not create a meaningful overpayment risk. The carrier is using a theoretical risk to justify inaction.
• “Our process doesn't allow it.” The carrier points to its own internal procedures and claims that it has no mechanism for issuing advance payments. This is a policy the carrier created. It can change it. The absence of an internal process is not a justification for failing to meet external obligations.

The Structural Incentives

Behind the stated reasons lie structural incentives that favor delay. Every day the carrier holds onto your money is a day the carrier earns investment income on those reserves. Over thousands of claims, this float represents significant revenue. The carrier is not just indifferent to your urgent need for money — it has an affirmative financial incentive to keep your money as long as possible.

Delay also shifts leverage. A policyholder who has been without money for two months is more likely to accept a low settlement than a policyholder who received an advance and is not under immediate financial pressure. The carrier's refusal to advance money is itself a negotiation tactic — it creates precisely the kind of time pressure that benefits the carrier at the bargaining table.

This is why the historical shift matters so much. Carriers did not stop issuing advances because they discovered it was the wrong thing to do. They stopped because the environment changed, and the old strategy of buying compliance through generosity was replaced with a new strategy of leveraging delay. The machinery changed; the goal did not.

Bad Faith Implications of Refusing to Advance

The refusal to issue advance payments does not exist in a legal vacuum. When the circumstances make an advance both reasonable and necessary, the carrier's refusal can cross the line from aggressive claims handling into bad faith.

When Failure to Advance Becomes Bad Faith

The bad faith analysis turns on several factors:

• The carrier knows the insured has an urgent need.A displaced family, a business that cannot operate, an insured who has communicated in writing that they cannot secure housing without an advance — these are situations where the carrier is on notice that its refusal to pay is causing concrete harm.
• The eventual obligation is not in genuine dispute.If the carrier acknowledges coverage and has a reasonable estimate of the total, the question is not whether to pay but when. Refusing to pay early when the total is known (or knowable) serves no purpose other than preserving the carrier's cash position at the insured's expense.
• The advance is a small fraction of the total. Requesting an advance of $10,000 on a claim that will clearly exceed $100,000 is not asking the carrier to take a risk. It is asking the carrier to pay a fraction of an undisputed amount. The carrier cannot credibly claim uncertainty about whether it owes at least $10,000.
• The carrier's own conduct creates the need.If the carrier's delayed investigation is the reason no payment has been made, and the insured is suffering harm because of that delay, the carrier has created the very problem it is now refusing to solve. This circular dynamic — “we cannot pay you because we have not finished our investigation, but we control when the investigation finishes” — is the kind of claims practice that courts scrutinize closely.

Documenting the Bad Faith Case

If a carrier is refusing to advance money you need, every communication matters. Here is how to build the record:

• Put every request in writing.Demand the advance in a letter or email that specifically cites 10 CCR §2695.7(h) and explains why the amount is undisputed. Keep a copy. See our article on California Fair Claims regulations for the full text and context of these requirements.
• Document your financial hardship.If you cannot afford temporary housing without an advance, say so in writing. “I am unable to secure comparable housing without an advance of ALE. My family has been displaced for [X] weeks and we do not have the resources to front the costs of temporary housing that your policy was designed to cover.”
• Document the carrier's response.If the carrier refuses in writing, preserve that refusal. If the carrier refuses verbally, follow up with a confirming email: “This confirms that during our conversation on [date], you stated that [carrier] is unable or unwilling to advance ALE payments at this time.”
• Document the consequences.If you are forced to move in with family, accept substandard housing, or return to a home that is not safe or habitable because the carrier refused to advance money, document that as well. These consequences are directly attributable to the carrier's conduct, and they are relevant to a bad faith claim.

Partial Payments and the “All or Nothing” Problem

Beyond advance payments, policyholders frequently encounter a related problem: the carrier treats the claim as an all-or-nothing proposition, refusing to pay anything on one coverage until every coverage has been resolved.

In a typical homeowner's claim, there are multiple coverages at play: Coverage A (dwelling), Coverage B (other structures), Coverage C (personal property), and Coverage D (ALE). Each coverage is separate. The carrier may have completed its investigation of the building damage and arrived at a Coverage A number, while still investigating the contents claim or the ALE. Under the undisputed-amount rule, the carrier must pay the completed coverages promptly. It cannot hold the dwelling payment hostage until the contents inventory is finalized.

Yet carriers routinely do exactly that. They hold back the building payment “until the full scope is determined.” They wait to issue the ALE advance “until they have a clearer picture of the construction timeline.” They refuse to pay contents “until the inventory is complete and verified.” Each delay is individually justified by the carrier as prudent claims management. Taken together, they represent a systematic withholding of money that is owed and undisputed, in violation of the carrier's own regulatory obligations.

Coverage-by-Coverage Payment Obligations

Each coverage in the policy creates an independent payment obligation. The carrier must evaluate and pay each coverage on its own timeline:

• Dwelling (Coverage A):Once the carrier has completed its building estimate, the actual cash value of the building damage is due promptly — less the deductible and any recoverable depreciation. The carrier cannot delay this payment because it is still working on contents or ALE.
• Personal Property (Coverage C):The carrier must pay undisputed contents amounts as they are determined. If the insured has submitted a partial inventory covering half their belongings, the carrier should pay on those items while the inventory continues. Waiting for a “complete” inventory before paying anything on contents is a common tactic that violates the undisputed-amount rule.
• ALE (Coverage D): As discussed above, ALE is inherently a coverage that requires timely payment. The carrier cannot wait for the construction to be complete before paying for the housing the insured needs during construction.

Advance Payments vs. Accommodation Payments

Do not confuse an advance payment with an accommodation payment. They are fundamentally different, and the distinction affects your rights.

An advance paymentis money issued against a claim that the carrier acknowledges it will owe. The carrier is not disputing coverage — it is simply paying early, before the final total is determined. An advance does not affect your rights to dispute the final amount, and it does not come with any suggestion that the carrier is doing you a favor. It is simply a timing decision about when to release money that everyone agrees will be owed.

An accommodation paymentis something entirely different. An accommodation is money the carrier pays while simultaneously claiming it may not owe the money at all. The carrier frames it as a “courtesy” or “goodwill gesture” and accompanies it with language reserving its right to deny coverage. Accommodation payments are designed to protect the carrier, not the insured, and they often come with releases or settlement language that can compromise your ability to fight for the full amount.

When a carrier offers an accommodation payment, it is worth asking: if the carrier genuinely believes it does not owe this money, why is it paying? Often, the answer is that the carrier believes it does owe the money but wants to pay less than the full amount while insulating itself from a bad faith claim. The “accommodation” label lets the carrier underpay while claiming generosity.

If you are offered an accommodation payment, treat it with skepticism. Read everything that comes with it. Consider whether the carrier is offering it in lieu of the advance or partial payment it is actually obligated to make. And consult with a professional before signing anything that accompanies the check. See our detailed article on accommodation payments for a thorough discussion.

How Carriers Use Partial Payments Strategically

Not all partial payments are favorable to the policyholder. Carriers have learned to use partial payments as a claims-handling tool that serves their interests, not yours. Being aware of these strategies helps you respond appropriately.

The Lowball Partial Payment

The carrier issues a partial payment based on a deliberately low estimate, then treats that estimate as a baseline that the insured must overcome. The psychological dynamic is powerful: the insured has money in hand and feels that the claim is “mostly settled.” Fighting for the additional $30,000 or $50,000 that is actually owed feels like going backward. Many policyholders accept the partial payment and never pursue the supplement, which is precisely what the carrier intended.

For guidance on recognizing and responding to lowball offers, see our article on insurance checks.

The Restrictive-Language Payment

The carrier issues a partial or advance payment accompanied by a check that contains “full and final settlement” language, or by a letter that frames the payment as a complete resolution of the claim. If the insured deposits the check without objecting to the language, the carrier later argues that the claim is settled. This tactic converts what should be a routine partial payment into a trap.

Always examine both sides of any insurance check before endorsing it. If the check contains restrictive language, write “accepted as partial payment only — all rights reserved” above your signature. Better yet, demand that the carrier reissue the check without the restrictive language before you deposit it.

The Advance That Is Not Really an Advance

Some carriers issue what they call an “advance” but which is actually the only payment they intend to make. The carrier issues $15,000 as an “advance,” then completes its estimate and determines that the total claim is $15,200. The “advance” was, in reality, the entire payment — the carrier just called it an advance to create the impression that more money was coming.

You can protect yourself by confirming in writing that the advance is a draw against the final total and that the carrier acknowledges additional payments will follow based on the completed investigation. If the carrier is unwilling to make that confirmation, the “advance” may be the only money you will see without a fight.

Practical Strategies for Getting Money Sooner

Knowing your rights is essential, but knowing how to exercise them effectively is what gets money in your hands. Here are the strategies that experienced professionals use to accelerate payment.

1. Demand Advances in Writing on Day One

Do not wait for the carrier to volunteer an advance. The moment you have a covered loss that will require significant spending before the claim is resolved, send a written demand for an advance. Cite your policy, cite 10 CCR §2695.7(h), and explain specifically what you need the money for. The written demand starts the clock and creates a record.

2. Use the Carrier's Own Numbers Against Them

If the carrier has prepared any estimate — even a preliminary one — use it. “Your own adjuster's preliminary estimate shows $45,000 in building damage. Even if you adjust this number through your investigation, you have acknowledged that a significant amount is owed. I am requesting immediate payment of the undisputed portion of this amount.” The carrier cannot easily argue that its own estimate is wrong.

3. Provide Documentation That Makes Payment Easy

Carriers often use “we don't have enough information” as a reason to delay payment. Remove that excuse. Submit lease agreements, hotel receipts, contractor estimates, and contents inventories proactively. The more documentation you provide, the less justification the carrier has for claiming it cannot determine the undisputed amount.

4. Frame Every Request in Terms of the Undisputed Amount

The phrase “undisputed amount” carries legal weight in California. When you frame your request as a demand for the undisputed amount, you are invoking a specific regulatory obligation that the carrier knows it must comply with. Do not ask for “some money” or an “advance.” Ask for “the undisputed amount, as required by 10 CCR §2695.7(h).”

5. Escalate Strategically

If the frontline adjuster says they cannot issue an advance, escalate. Ask for a supervisor. Ask for a manager. Ask for the name and contact information of the person who has authority to approve advance payments. Document every level of the organization that refuses your request. The more people who say no, the stronger your eventual bad faith case.

6. Hire a Professional

There is a reason the advance-payment strategy used to work for carriers: policyholders who received early money were less likely to hire professionals. The inverse is also true. Policyholders who hire a public adjuster or attorney are more likely to receive advance payments, because the professional knows how to demand them effectively and the carrier knows that refusing a professional's request carries different consequences than refusing an unrepresented insured.

The Role of the Mortgage Company

One complication that policyholders often do not anticipate: even when the carrier issues an advance or partial payment, the check may be made payable jointly to the insured and the mortgage company. The mortgage company has its own process for endorsing insurance checks, and that process can add weeks or months to the timeline.

This creates a situation where the carrier has technically issued the payment, but the insured cannot access the money because the mortgage company is holding it. The carrier points to the mortgage company and says, “We paid. Take it up with your lender.” The mortgage company says, “We will release funds as repairs are completed.” The insured is caught between two institutions, both of which have the insured's money and neither of which is in a hurry to release it.

If your property has a mortgage, factor this into your advance payment strategy. Request that ALE and contents payments — which are not secured by the property — be issued directly to you, without the mortgage company as a payee. Building payments will typically include the mortgage company, but there is no reason for ALE or contents checks to be held up by the lender's process.

Advance Payments in Commercial Claims

Everything discussed above applies to commercial claims as well, but the stakes are often higher and the dynamics more complex. A business that suffers a major loss needs immediate cash flow to survive. Business income coverage is analogous to ALE — it replaces income the business cannot earn while it is closed or impaired — and the need for advance payments is just as urgent.

Commercial policyholders face an additional challenge: the business income calculation is often more complex than an ALE calculation, which gives the carrier more room to delay. The carrier may argue that it cannot determine the business income loss until the policyholder provides tax returns, profit and loss statements, and other financial documentation. Meanwhile, the business is bleeding cash.

The same undisputed-amount principle applies. If the carrier acknowledges that the business is closed and that business income coverage applies, some amount is undisputed. The carrier cannot withhold all business income payments while it refines its calculation of the exact monthly loss. A reasonable advance, based on the business's most recent financial statements, should be paid while the detailed analysis continues.

When Advance Payments Are Not Available

There are situations where the carrier's refusal to advance money is defensible. Understanding these situations helps you calibrate your expectations and focus your efforts where they will be most productive.

• Coverage is genuinely in dispute.If the carrier has raised a legitimate coverage question — for example, whether the loss was caused by a covered peril or an excluded one — it may be justified in withholding payment until the coverage question is resolved. But even here, the carrier should be paying the undisputed portion of any coverage that is not in question.
• The claim is under investigation for fraud.If the carrier's Special Investigations Unit (SIU) has referred the claim for a fraud investigation, payment may be delayed pending the outcome. However, the carrier cannot delay payment indefinitely on a pretext — the investigation must be conducted in good faith and with reasonable speed.
• The insured has not cooperated with reasonable requests.If the carrier has made legitimate requests for documentation or access and the insured has not cooperated, the carrier may condition payment on the insured fulfilling their duties after loss. But “cooperation” does not mean agreeing to everything the carrier demands — the insured's obligation is to cooperate reasonably, not to submit to every request without question.

The Emotional Dimension: Why Money Matters Beyond the Dollars

The advance payment issue is not purely financial. It is deeply emotional. A policyholder who has just lost their home is in crisis. They are dealing with grief, displacement, uncertainty about the future, and the overwhelming task of rebuilding a life. Receiving money from the insurance company — even a partial advance — is a signal that the system is working, that someone is going to help, that the premiums they paid were worth something.

Conversely, waiting weeks or months for any payment while the carrier processes paperwork sends the opposite signal. It tells the insured that they are alone, that the system does not care about their circumstances, and that the insurance company's internal processes matter more than the insured's immediate needs. That emotional impact has real consequences: it drives policyholders toward depression, toward accepting lowball settlements out of desperation, and toward abandoning claims altogether.

This emotional dynamic is not lost on carriers. The question is whether they account for it as a factor that should motivate earlier payment, or as a factor that makes delay an even more effective claims-management tool.

Summary: What You Need to Know

• Advance payments are money issued before the final claim amount is determined. They are credited against the eventual total — they are not extra money.
• Carriers used to issue generous advances as a deliberate strategy to keep policyholders compliant and less likely to hire professionals. That strategy has largely been abandoned, and the result is that policyholders now wait much longer for any payment at all.
• California law (10 CCR §2695.7[h]) requires carriers to pay undisputed amounts promptly, even while disputed amounts are being negotiated. This effectively creates a mandatory advance payment mechanism in most claims.
• The carrier's refusal to advance ALE payments can constitute bad faith when the insured cannot afford temporary housing without the advance and the eventual ALE obligation is not in genuine dispute.
• Do not confuse advance payments with accommodation payments. Advances are money the carrier acknowledges it will owe. Accommodations are money the carrier pays while claiming it may not owe anything.
• Each coverage in the policy (dwelling, contents, ALE) creates an independent payment obligation. The carrier cannot withhold payment on one coverage because it has not finished investigating another.
• Demand advances in writing, cite the regulation, use the carrier's own numbers, and escalate when necessary. Document every refusal.
• Hiring a public adjuster or attorney significantly increases your chances of receiving advance payments, because professionals know how to demand them and carriers know the consequences of refusing.

Final Thought

Insurance companies hold all the structural advantages in the claims process: time, money, expertise, and institutional patience. Advance payments are one of the few mechanisms that partially level the playing field. When a carrier pays money early, it reduces the financial pressure on the insured, which reduces the carrier's leverage, which leads to fairer outcomes. That is exactly why carriers resist paying early, and it is exactly why you should insist on it.

The law is on your side. The regulations require it. The duty of good faith supports it. The only question is whether you will demand it — and whether the carrier will have to answer to a court or the Department of Insurance for its refusal.

Sources & Further Reading

• Property Insurance Coverage Law Blog (Merlin Law Group)— Attorney Chip Merlin has written extensively on how the failure to advance ALE and partial payments can itself constitute bad faith. Search the blog for “advance payment” and “partial payment.”
• United Policyholders— Consumer-advocacy resources on advance payments and additional living expense after a disaster (uphelp.org).
• CDI Bulletin 2025-2— California Department of Insurance guidance on wildfire consumer protections and advance payments.