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Question DetailsAsked on 6/20/2016

Home insurance claim settlement check question

I received a settlement check for water damage. The hallway floor and a row of kitchen cabinets had to be removed. The settlement check covers replacement of floors in the whole house and replacement of the row of kitchen cabinets. I think i can get just the hallway floors repaired rather than replacing floors through the entire house. Can i use the extra funds to upgrade the kitchen (maybe all new cabinets rather than just replacing the row of damaged ones) as long as all damage was repaired? The insurance broker is asking for receipts after repair. I am in no way trying to get free money and fully intend on having professionals repair all damage i was paid out for, as well as intend to use all of the money solely on the rooms that were damaged? What if the receipt totals presented for proof of repair to the insurance company don't add up exactly? Am i just being paranoid?

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3 Answers


Certainly you "can" get just the damaged floors replaced, not the whole house.

Since he is asking for receipts, rather than just doing a cash settlement, obviously the intent (as with all insurance) is that they pay for only the actual damage, not toss money your way to upgrade unaffected stuff.

You might have the option, since there is excess funds, to upgrade the cabienets or flooring to more closely match the settlement amount - though generally it will cover only comparable materials, not upgrades.

The question of replacing all the cabinets is an iffy one and would probably depend on the insurance adjuster/company - if you could argue that it is impossible to match the existing cabinets so all of them have to be replaced to match maybe legit, but that is a long shot - a good cabinet maker should be able to pretty well match any cabinet with a bit of effort and some trial and error on blanks to get the finish right (which testing would be a legitimagte part of the claim).

In general, replacing or upgrading things that were not directly damaged in the claimed incident, using money on other things, pocketing money from the claim, or not paying your deductible out-of-pocket is insurance fraud and can cost you not only a fraud charge and criminal record but you can also end up blacklisted by insurance companies from basically ANY type of insurance - including health, car, etc, plus take a major hit on your credit report - so don't do it !

If the valid repairs of the damage do not cost as much as the adjuster's estimate or authorized claim amount, then that actual amount si what should be paid by the insurance company - less your deductible and any depreciation deduction.

Answered 4 years ago by LCD


As stated in the first sentence of my question, i did receive a cash settlement (settlement check) already. When i inquired about the receipts/pictures they said that is just to proove the things that were damaged are now fixed. As i stated, I'm not trying to do anything devious but 90% of my floors were not damaged. The field adjuster is the one who decided to pay out to replace all the floors in the house. Does this additional information change anything?

Answered 4 years ago by Rpatt


You would have to read the fine print in the adjustment and on the paperwork that came with the check or on the claim forms - because there are three common ways home damage insurance settlements are made:

1) they pay the contractor direct, and you pay the contractor the deductible amount, to total up to the full bill - obviously not your case

2) they pay you an adjuster's estimate amount to get the work done yourself - and require documentation on the final total of amounts paid. They may (with justification) pay you more (as an amended adjusted loss amount) if you can prove it should have been a higher amount - obviously safer to get the additional money once bids show the estimate is too low - BEFORE spending money they may not come through with. IF the estimated check is over the actual cost, then you have to reimburse the difference (after taking into account your payment of the deductible).

3) they pay you an undisputed lump sum cash settlement for the damage, and may or may not require proof that the damage was actually fixed - usually just with photos though with Photoshopping so easy to do these days they may require some receipts too. Once you accept this type of settlement the money is yours - though without the proof the damage was repaired any future claims for any damage of those areas will be denied because the "Damaged" sitems have already been paid for but not replaced (at leasat on their records) without the repair proof. In this case, the amount they paid would also be deductbed from any total-loss claim like for a complete destruction fire, on the premise they already paid for that part of the repair but it was not done you you technically still have the money for that part of the claim.

You would have to find out if your type is 2 or 3 - if 3, then you would be free to use the extra money for upgrades. But I would make absolutely sure FIRST - because I can foresee the possibility their claims audit department will notice (a few months down the road) that the adjuster incorrectly put in for replacement of all flooring in the home and will modify the payment aftear the fact. Possible he did it on purpose because he felt (if all your flooring is identical) that it would not be possible to get a match with the existing flooring, but usually that is only done room-by-room - commonly will allow a full room flooring (or painting) replacement if only part of it is damaged so you can get a match, but only on a room-by-room basis, not entire house.

HOW you go about finding this out without cluing them into the fact they gave you too much - that is the hard part, and short of asking an attorney specializing in insurance claims I honestly do not know how if it is not clearly stated on the settlement paperwork (or your claim application) whether any excess funds have to be returned or not, and whether you have to provide receipts documenting the expenditure of the full amount of the payment, or just enough documentation to prove the damaged flooring and cabinets were replaced. Your insurance agent MIGHT help you understand it - but might just as well report the overpayment to the claims department, too. Probably depends somewhat on how well they know and like you.

You did not say anything about the kitchen flooring - was that undamaged hard surface flooring like tile or concrete ?

But whatever you do, do NOT get involved in falsifying paperwork - like the contractor putting down a higher cost for the hall flooring and kitchen cabinets or putting type or grade of flooring/cabinets on the form that do not match what was actually done and thereby, on paper, giving you the upgrades for "free".

Answered 4 years ago by LCD

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