I have a check from my insurance company and they are required to put US bank on the check as well as mine per US bank; to insure the property gets fixed. They told me since I am doing this myself that I can't get payment until I pay out of pocket for the damages and pay an inspector to inspect the property. Even with contractor they still want me to pay an inspector.
review this with a real estate lawyer. usually the bank has a provision in their mortgage or deed of trust that requires that insurance proceeds from a casualty (fire windstorm etc.) have the bank as a cosigner on the check if the policy doesnt require the check paid directly to the bank. this is the banks assurance that you will use the money to fix the house up and make it to the condition it was prior to the casualty. this protects the banks interest as the value is back to what it was and it prevents you from squandering the money at the casino thinking you will be the next millionaire.
without a detailed review by a lawyer can all the issues raised in your question be appropriately addressed...nothing in this response should be construed as establishing a lawyer client relationship..the answers herein are for informational purposes and not to be construed as advice