Can I keep my homeowners insurance claim check and make the repairs myself?
UPDATED: Jan 28, 2013
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Asked January 28, 2013
If your insurance company writes a check to pay for a claim, you have the option of how to use the check. The insurance company would prefer you use it to pay for repairs, as it was intended, but it is common for a homeowner to perform the repairs themselves and use the settlement from their insurance company to do other things, such as adding a new room to the home to make room for a growing family.
Once the claim has been settled, the insurance company will not pay for the same damages again. If you choose not to have the damage repaired at all, those damages could cause other damage over time and eventually result in a new claim for extensive damages that will be denied by the insurance company. Since these new and potentially worse damages would not have occurred if you had repaired your house with the first settlement check, they will be denied under the grounds that you were negligent in your duties as a homeowner.
The best approach is to use the money from your homeowners insurance company to repair the home. Licensed contractors carry liability insurance that will pay for damages they cause, or for them to come back and do the job right if it is not completed correctly the first time. Paying a contractor will also take care of getting the permits required before any construction can begin.
If you are trying to cut costs and have the capability, use the settlement for materials and supplies, then perform the work yourself. For most homeowners, this option may sound like the best way to get some "free money," but the harsh truth is that doing the repairs yourself could result in additional costs that are not covered by your insurance. For example, if a contractor falls through your skylight, his insurance pays for the replacement, but you fall through it, then you have to pay for the new skylight out of your own pocket.
In the end, the decision of whether to keep the money is up to you. Failing to get the repairs done, either by you or someone else could leave you liable for future claims, but if you are willing to gamble that you will not have any problems related to the repairs in the future you are free to spend the settlement any way you see fit.
Answered January 28, 2013 by Anonymous