Homeowners payout and contractor

[Jennifer Cropper]

I have water damage to my home and my homeowners insurance was involved immediately. I used a mitigation company with a good reputation I chose and the insurance company accepted. Their remodeling arm put in an estimate to the insurance company for the remodeling work. The insurance company sent out their own contractor who put in a lower bid and in the end they settled for an amount in between. I have replacement value insurance.  

So here is the issue. This is quite a large job. The insurance company sent a two party check made out to me and the contractor. We are supposed to both sign it but this check can only be deposited in the contractors account.  The depreciation amount the contractor will receive at the end of the job is minimal- about 15% of the amount of the initial amount. I called the insurance company and said you want me to pay the contrator practically the FULL AMOUNT before he ever hammers in a nail! The adjustor, who is a supervisor, said yes thats how we do it. I said have you ever remodeled a house? She said no. I said what happens if the contractor doesnt finish the job, does it incorrectly or goes out of business while my house is being repaired? She could not answer me. She just said this is how we do it. Wth? I have never in my life paid a contractor the full amount of a job up front especially one this big. Remember, this is not one of their contracted companies. I am using a company I chose and they approved that I know does good work. But the contractor is stumped as well. They typically do a third down, third half way through and a third when its finished.

help!