Bank could cash the check if you endorse it to them. I would call your insurance company and tell them what is going on. See if they will cut a check directly to your plumber if you send them the check back.
The modification for the loan is very likely to be denied because the banks throw away the paperwork. the bank has to endorse the check to the plumber...they may want to take the money and send it to the workman directly to make sure the repairs are done and the person gets paid.
Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.