Who Gets an Insurance Claim Check: The Contractor or Homeowner?

How insurance companies handle claim payments varies. While individual states have their own requirements for how companies must respond to claims, different insurers also have their own guidelines for processing claims. But it may help to have a contractor present when the insurance company sends a claims adjuster to your home to inspect damage. That way, the contractor and adjuster can discuss estimates to repair the damage. Sometimes a contractor has to negotiate the cost of repairs with the insurance company.

Approved Contractors

Although some insurance companies allow homeowners who file claims to choose their own licensed contractors to repair damages, others give you a list of approved contractors from which you must choose. These are normally contractors with whom the insurance company has worked before. But even a contractor referred by the insurance company still must submit a written bid for approval. Usually, an insurance company will guarantee a contractor’s work if it made the referral, says website Insurance-claim-contractor.com.

Paying Contractors

In some cases, an insurance company will pay the contractor if you request it. The general contractor you hire may ask you to sign a permission form when you sign the contractor agreement. The form allows the contractor to bill your insurance company directly. If your homeowner’s insurance agrees to pay the contractor instead of you, check the work and make sure you are completely satisfied with the job when it's completed. Resolve any problems before giving your insurance company the go-ahead to make the final payment to the contractor, the Rocky Mountain Insurance Information Association advises. The general contractor is responsible for paying any subcontractors for the work they do.

Paying Homeowner

The claim-filing process varies depending on an insurance company’s claim procedure. Some insurers will issue the claim check to the homeowner rather than to the contractor. It is then the homeowner’s responsibility to see that the contractor is paid. If the insurance company determines that the damage to your home is covered under your policy, it will pay to repair your property up to the policy limits. Review your policy to find out if it includes deductibles or other payment provisions.

Paying Mortgage Lender

If you have a mortgage on your home, your homeowner’s insurance may name both you and your mortgage lender on the settlement check, especially if you file a large claim. Even though your name is on the check, your lender likely will hold some or all of the insurance proceeds in an escrow account until releasing the money for you to pay the contractor, says United Policyholders, an information resource for insurance consumers. Usually, a lender issues funds from an insurance settlement payable to you and your contractor in more than one distribution. You will get a portion of the funds to start the repairs, another payment when the job is 50 percent completed and the remainder when the repairs are fully completed.

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