Does the insurance company penalize for claims filed and paid but homeowner never has work performed?

What do you mean by penalize? I am seeing policies written on properties which have mortgates or lines of credit against them requiring that proof of the work's completion be provided to the insurance company.

I live in the home I grew up in but my mom lives out of town since '03 since dad died and the insurance is in her name. I made a claim due to rain water damage causing the roof to leak. The check was sent to this (the home) address and I forwarded on the my mom where her sister handles her finances. It's been over two months and the aunt has not cashed and sent me the money for the repairs. This is the second time in four years a claim has been made and paid for but they did not get it done.

Generally when an insurance carrier issues a check for repairs, the check is made out to the name of the homeowner AND the lienholder. The lienholder then releases the money when proof of repair is made.

If a claim is made and the repairs not done, the carrier can cancel the insurance or raise the rates.

Ok thank you. Yes, the check was issued to my mother; the insured. They just have not cashed and sent the money to me to have the repairs done. I suppose this is more of a "family matter". Nothing the insurance company can do about that.