From Payment to Rebuilding
Article 11 in 12 on Home Insurance
From Payment to Rebuilding
Once your homeowners insurance claim has been filed and approved, there's still work to be done. Learn the steps involved from receiving payment to rebuilding your home.
Payment From Your Homeowners Insurance Company
Once your home insurance company agrees to pay all or part of your claim, it must do so within five business days. Most homeowners insurance companies will pay you, the homeowner, with two checks. If your home is mortgaged, the check for home repairs will generally be made out to you and the mortgage lender. As a condition for granting a mortgage, some lenders require that they are named in the homeowners policy and they are party to any insurance payments related to the structure. The lender has an equal right to the insurance check. This way, they make sure that the necessary repairs are made. The mortgage company or lender will need to endorse the check. They may want to inspect the finished job before releasing the funds for payment. State bank regulators often publish guidelines for banks to follow after a major disaster (which usually slows down the whole process.) You can contact the state regulatory office to find out what these guidelines are.
The first check is for the estimated cost of repairs, minus depreciation and your deductible. The second check is for the balance of your claim. As long as the repairs or replacements are completed in 365 days from the date of incident, this check is issued after the company receives the contractor's bill for the finished job.
Some contractors will ask you to sign a "direction to pay" form that allows your homeowners insurance company to pay the firm directly. The contractor's firm will bill your insurance company directly and attach the form you have signed. Before you sign any forms, make sure you are completely satisfied with the repair work and that all the work has been completed.
If you have a replacement cost policy for your personal possessions, you will need to replace the damaged items before your insurance company will pay you. If you decide not to replace some items, you will be paid actual cash value. Your insurance company will generally allow you several months to replace all the damaged items. Find out how many months they allow.
Rebuilding And Making Repairs After A Home Insurance Claim
Sometimes following a disaster, your insurance company may be overwhelmed with claims. If you feel your first evaluation is not complete, set up an appointment for a second visit. If you are offered an on-the-spot settlement, you can accept the check right away. If down the road you end up finding other damage, you can reopen your claim and file for an additional amount.
The choice of repair firms is yours. If you were adequately covered, you won't have to settle for anything less than you had before the disaster. If you've received bids, show them to the adjuster. If the adjuster agrees with one of the bids, the repair process can begin.
If your home was destroyed, you have several options. You can rebuild a new home on the same site. Depending on the law in your state, you could sell the land and build or buy in a different place.
You could decide to rent. If you decide not to rebuild, the settlement amount depends on state law, what the courts have said about this matter and the kind of policy you have. Find out from your agent what the settlement amount will be based on.
If you decide to downgrade when making repairs, you are not entitled to the difference in cash.
If your home was damaged and it was not in compliance with current local building codes, you may have to rebuild according to current codes.
Learn From Your Homeowners Insurance Claim
After you have settled your claim and all the repair work is complete, ask yourself the following questions: Was your home adequately insured? Did you have enough replacement cost coverage for your personal possessions? Do you need to talk to your insurance agent about making changes in your policy? Carefully consider these factors and adjust your insurance coverage accordingly.
