Who Is Entitled to Leftover Home Insurance Claim Money?

Often, homeowners assume that they will receive a home insurance claim amount, but unfortunately, that is not always the case. Claim amounts for damaged personal belongings and additional living expenses will be paid to the homeowner. However, if you have a mortgage, both you and your lender are entitled to claim payouts. In such circumstances, you may need to sign the payment and keep it in escrow until the repair work is done and approved for payment.

Besides homeowners and lenders, some people, like contractors and property management companies, can also receive a claim payout.

A home insurance claim process varies from provider to provider depending on the policy type, claim amount, and the extent of the damage. However, generally, you can expect the following:

• Damage Assessment - Once you file a claim, your insurance adjuster will visit your home to assess the damage. They will measure the extent of the damage to determine how much repairs will cost depending on the current market rates for materials and labor and additional overhead costs for the contractor, as applicable.
• Cost Estimation - Depending on the damages, the adjuster and contractor will determine the estimated payout. The claim process can take a few weeks for small claims. However, for costly claims, the process can take months too. During this time, you can have your general contractor assess the damage and its cost to cross-check whether the adjuster’s estimate is accurate.
• Payment Hand-Over - After your insurance provider has agreed upon the estimated cost, you will receive an initial payout via a mailed check or bank deposit. For replacement cost value coverages, a second payout (depreciation cost) will be released after submitting a certificate of completion stating the required repairs are done.

If your loss includes different coverages, your claim may include multiple payouts. For example, if your home is destroyed by a hurricane, you will receive the first payout for exterior damages, the second payout for replacing lost personal belongings, and the third payout for additional living expenses.

You can keep the leftover claim money, provided you are not asked to return it to your carrier or did not commit fraud to get the money.

If your insurance provider’s payout seems to be less than what your general contractor has estimated, you can negotiate the price with your provider before accepting it. However, negotiating the claim amount may lengthen the claim-processing time, thus delaying repairs or replacements.

Whether a small or large claim, the recipient is entitled to keep the leftover money if they are legally allowed to keep it.