When there’s significant damage to your home, as may be the case following a severe storm, home insurance can be very much appreciated. Payouts from claims usually cover repairs and the replacement of anything else applicable that was damaged. If there’s leftover money, you may be able to keep it if your insurance provider allows this. The experienced agents from Altra Insurance Services, a leading provider of homeowners insurance San Diego residents rely on for high-quality service and affordable coverage, explore this topic further below.
How a Claim Works
To give you a better understanding of what options you may have with any leftover home insurance claim money, let’s briefly go over the claims process. When a homeowners insurance claim is filed, the basic steps involved include:
• Assessing the situation
• Estimating damage costs
• Issuing appropriate payouts
How the Money Is Distributed
The first deposit or check usually goes to you as the homeowner or your mortgage lender. Replacement cost value, or RCV, is typically the second installment, which takes depreciation or loss of property value into consideration. It’s common for homeowners to receive the money from a home insurance claim, but this isn’t always the case. However, if the money goes to your mortgage lender or a property management company instead, which can happen in some cases, you would have to work with either one of these parties to obtain any of the payout money.
It’s also possible an insurance provider may opt to send the money directly to a contractor instead of the homeowner. When this is the case, it’s usually a contractor from the insurance company’s list of approved contractors. In this instance, the contractor often manages the payments and anything that may be left over.
Options if You Get to Keep Leftover Money
As long as there’s nothing to the contrary in your policy’s terms and conditions, it’s often possible to keep any leftover money from your claim. The caveat, as mentioned above, is you must have access to the money. If it goes to your lender, you may not get anything left over. If you’re able to keep the leftover money, possibilities for using it include:
• Making home improvements – After repairs have been made, leftover money can always be used to make improvements that are entirely optional. The added perk here is you may be able to save money when it’s time to renew your policy due to the improvements you made.
• Paying off bills – Some homeowners prefer to use any leftover claim money to reduce their regular financial obligations. This is beneficial, since paying off certain bills can have a positive impact on your credit rating, which can come in handy if you need another home loan in the future.
• Adding to your savings – Another possibility is to hang on to the money and use it as a safety net. This can be appreciated if you want some extra peace of mind for any unforeseen circumstances that may affect your financial situation.
Being Honest with Your Insurance Provider
It’s important to be honest with your insurance provider if you’ll be using any leftover claim money for other purposes. It’s perfectly fine to do this as long as there’s nothing specifically prohibiting it. However, if you fail to be forthcoming with your provider, there’s the possibility of being accused of insurance fraud.
If you aren’t sure if you can keep any extra funds from a home insurance claim, consult your insurance provider. For reliable, affordable homeowners insurance, San Diego homeowners know they can trust Altra Insurance Services. We also provide renters, commercial, motorcycle, and auto insurance. Request a free quote by calling one of our friendly agents today at (800) 719-9972.