After filing a home insurance claim, the insurance company will pay for the cost of repairs done in your house. But you might face various thoughts about keeping the money. There are few factors that will influence the response to the question.
In our “using home insurance claim money” article, you will learn about who will receive the home insurance money, what happens to the money left over, and the mystery behind the entire claim process. Today, many homeowners think they are entitled to collecting a home insurance payout after a claim, but that isn’t always the case.
According to financial expert Laura Adams, additional living expenses (cost of hotel if your home isn’t habitable during reconstruction) or personal belongings are separate amounts of money you will receive. In other situations, you might not be the one to receive the money, and if you have a mortgage, payments for your home damages will be made to you and your lender. This might cause you to endorse the payment and leave it in escrow until the work is done and payment is approved.
This ultimately means that more than one person can receive the money for a home insurance claim, and below are some people that are potential receivers of claim insurance money after damages;
Mortgage Lender – The money will go to your lender if you have a mortgage, and this will warrant you to work with your mortgage company before getting the money. In some cases, the mortgage company might push to inspect repairs done in your home.
Homeowner – The money from an insurance claim will go to you if you own the house fully, and this is because you are directly responsible for hiring a contractor to carry out repairs for you.
Contractor – In some cases, insurance companies might bypass the house owner and pay the money from an insurance claim to the contractor. This method is possible if the insurance company has a network of professionals that it works with or if you appointed the contractor to receive and manage the claim on your behalf.
Property Management Company – For example, a person that owns a condo will not receive money from an insurance claim. Instead, the money will go to the property management company or condo association. In this situation, the condo owner will have to request the money and work with the property management company to ensure that repairs are done.
Using Home Insurance Claim Money
Getting paid after filing a home insurance claim involves a lot of processes. It might take up to weeks or more for a repair estimate to be reached, but this depends on the extent of damage at hand. You should also have it in mind that all insurance companies do not have the same protocols, but below is an overview of what the process involves;
Assessing The Damage
After a homeowner files a claim, the insurance company will send a claims adjuster to assess the damage physically. The reason for sending the claims adjuster is to know the extent of damage and develop an estimate that will be suitable for the repair. After visiting your home, the insurance adjuster might meet with another contractor for a second opinion on a repair estimate before the insurance company makes a final decision.
Cost Of Repairs Estimate
After gathering evidence, the contractor and an insurance adjuster will discuss a suitable estimated payout. It could take weeks to develop an estimated payout for smaller claims, but the period could take longer than a few weeks if the claim is a huge one. You can also use the opportunity to consult with your own contractor to compare if their estimate would be okay for the repairs.
How To Receive The Payout
After the claim has been settled and an estimate has been agreed on, the homeowner would get an initial payout. How you receive the payout depends on your agreement with the insurance company because it can come from a direct deposit or mail form.
Keeping Leftover Money From A Home Insurance Claim
Technically, homeowners are allowed to keep leftover money from a home insurance claim, and this stands only if there is no written agreement in your policy about returning unused money. You should be able to keep any money left from a home insurance claim as long as you didn’t lie to the insurance company to get the money or commit insurance fraud.
Besides, the consequence of lying to your insurance company about your claims can be significant. If you fail in meeting up with the repairs and do not meet the insurance company’s satisfaction, it might lead to denial of claims in the future.