Can I keep insurance money for roof?
The simple answer is yes. It is your money, and you can do with it what
you want. We encourage you to be responsible. The answer gets much more
complicated if a mortgage company has an interest in your home.
Whether you do the home repairs, hire a third-party to do them, or don't
do any repairs, it is entirely your decision. If you have a mortgage company,
the insurance carrier will also list them on the insurance claim settlement.
Regardless of whether you do the repairs, home insurance carriers commonly
underpay property damage by at least ten thousand dollars.
More information
Most of the time, your mortgage company will let you do the work yourself.
Still, the amount of supervision they want to provide will vary depending
on the severity and complexity of the damage and your balance owed on
the mortgage.
If the work requires relatively little skill, like cleaning up debris,
your mortgage company is more likely not to care. Still, if your home
damage repair is highly technical, there will likely be more involvement,
ie, like plumbing.
Legality
Another concern is whether repairing is legal for you. Depending on the
severity of the damage and the laws you live in, you may need to get a
permit from your city or have a license to do the necessary repairs.
Your city may require an electrician to do all electrical work.
If you can't get these approvals, you may not be allowed to do the
repairs yourself. Check with your local building or development department
to see what permissions are needed for repair.
If you have a mortgage on your home, your lender may have a say in repairing
your home and give you a hard time. One standard clause in mortgage contracts
is to name your lender on insurance claim checks.
If you have this clause in your mortgage contract, some or all of your
insurance company's funds will have your name and the name of your
bank on the check.
Usually, the bank places the money in escrow and uses the funds to pay
the contractor directly after completing the repairs.
And since the bank controls the money and is interested in ensuring your
house is well repaired, it may not allow you to do the work yourself.
So check with your mortgage company if it will enable self-repair.
You also have the right to contact an experienced property damage attorney.
Is it a good idea to repair your home yourself?
Before deciding to repair your home, consider financial costs, local regulations,
and, above all, work safety. Even if your mortgage company gives you the
go-ahead to do the repairs on your home, you should seriously consider
the risks and whether it's worth it to do the work yourself before
committing to self-repair.
The first and most important issue is safety. Many dangerous elements can
be involved in repairing a home.
If the damage to your home is something like an electrical system, and
you're not experienced with it, you shouldn't take this opportunity
to learn — leave it to the professionals.
You should also assess whether the amount of money you'll save is worth
time and effort, especially if you're not already a DIYer.
You can vary a lot depending on the nature of the repairs, the claim's
size, and your insurer's policies.
Although major home repairs may require a permit or license, homeowners
generally have more leeway than professionals on what they can do without
a permit or license. But if work is done without a permit or not done
to a professional standard, your insurance company probably won't
cover further repairs if something is wrongly fixed.
For example, imagine a falling tree damages your fence, and you repair
it yourself. If a windstorm later damages the wall and the insurance company
has evidence that the first repair failed adequately, it may not cover
the second round of damage.
Finally, if the damage is relatively minor or cosmetic and you're considering
repairing it yourself, it might be better not to make a claim. Keep in
mind that you do have the right to obtain dispute information on your
CLUE report. You may want to speak with an experienced home insurance
attorney before making a claim.
Even if you can get some money from your insurance company now, multiple
requests can make your rates jump, costing you more money in the long
run. It may be cheaper and simpler to work yourself without involving
your home insurance company. You also may want to enlist the services
of a lawyer to increase the payout of your property loss significantly.
Insurance companies often spend millions of dollars demonizing lawyers
because they are the most effective tool for consumers.
Process of repairing a home using insurance money:
To understand the situations in which you can choose to repair your home
yourself under a homeowner's insurance claim, it's helpful to
know how the claims process works when you employ a contractor. The exact
procedure may vary by insurer, but the claims process usually goes like this:
Contact your insurance company and let it know there was damage to your home.
A claims adjuster scans the damage and creates an estimate.
Check the actual cash value. (ACV) of the damaged item.
If you have replacement cost value (RCV) coverage, the ACV check acts as
a down payment toward the repair's total cost.
You collect one or more labor and material cost estimates from contractors
to repair the damage and submit estimates to your insurance company for approval.
The contractor you select repairs your home.
Either you or the contractor sends a certificate of completion (also called
a letter of completion) to the insurer. If RCV covers you, the insurer
will release the remaining funds, also called the recoverable depreciation.
You'll use this money to pay the contractor.
How do repairs differ from hiring a contractor?
Whoever does the repairs, your insurance company will come
to inspect the damage and tabulate the damaged property's value.
Once you have an estimate from your insurer, get a detailed estimate from
a professional before committing to repairing yourself. A professional
can spot or anticipate the damage that may not be obvious to you, even
if you're an experienced DIYer.
They will also provide an authoritative estimate of the work's cost,
giving you more negotiating power with your insurance company when you
settle your final payout.
You can also enlist a highly skilled property loss insurance attorney.
They will hire experts to inspect your property and negotiate with the
insurance carrier for you. Even though they often charge a commission,
the insurance claim payment significantly increases and should offset
whatever they charge.
Before you start repairing your home, make sure you understand exactly
how your insurance company determines how much to pay you and when you
receive the money. They may have a standard payout to cover a specific
type of damage or calculate an hourly rate for your labor.
How is a claim payout determined
Each insurer administers its payouts differently, sometimes requiring detailed
repair estimates — especially for large losses.
Your insurer may take a relaxed, hands-off attitude towards paying a claim
and not ask for much information about how the money was used. Once you
and your insurer agree on an estimated repair cost, it may only require
proof that the work was done, such as a photograph or signed letter. Once
the evidence is received, it will send you the money to cover the full
repair cost without looking into who performed the repair.
In other cases, your insurance company may approach the claim much more
rigorously. This could include requiring a detailed estimate—or
multiple estimates—from licensed contractors and detailed accounts
of all the costs, such as materials and tools needed. It's also possible
your insurer will manually calculate how much it will pay for labor based
on established rates. If your insurance company goes this route, the dollar
amount the insurance company pays may end up being substantially less
if you do the work yourself compared to having the job done by a professional,
since it will often take out administrative costs from their calculations
self-repair.
Keep in mind that the more costly and complicated a claim you make, the
more oversight your insurer is likely to want. An avid DIYer may be able
to recarpet a room or repair a wall without much trouble. Still, an insurance
company is more likely to want a professional to take care of a very expensive
or dangerous repair like fixing a roof or overhauling an electrical system.
Be honest and willing to compromise.
Doing the work yourself is not an all-or-nothing situation. The optimal
solution may be for you to take care of the menial work, such as debris
removal, on your own, and leave the more specialized tasks, like wiring,
to a professional.
Can I keep extra homeowners insurance claim money?
You may have extra money left over from your homeowner's insurance
claim, whether it's because you saved money after doing the work yourself
or your contractor came in under-budget.
Typically, any money that you end up with is yours, and you didn't
lie or commit fraud to get it. Look over your homeowner's insurance
policy to see if any specific provisions detail what should happen with
leftover claim money.
Be honest with your insurance company. Whether you deliberately pad the
bills, you or the contractor sends to the insurer, or you lie and say
there's no money left over, it's considered insurance fraud. Insurance
fraud is a severe crime, and if you are caught, you may face prosecution
and a fine or jail time. Additionally, your policy will likely be canceled,
and you may get blacklisted from buying other insurance policies in the future.
Don't be afraid to consult with an experienced home insurance attorney.
