Insurance Claim Approved: Getting Paid by Insurance Company
Insurance Claim Approved: The Process of Getting Paid by Your Insurance Company After a Wind or Hail Storm
After your insurance claim is approved- getting paid by your insurance company is usually a two (possibly three) part process:
Part 1: Your insurance company will issue you the first check for the Actual Cash Value (ACV) of your claim made out to you and your mortgage company (if the insurance claim is over $10,000). Most insurance companies will make the check out just to you if the claim is less than $10,000 and/or if you don’t have a mortgage.
Part 2 (if necessary): A supplemental insurance claim must be filed if, after the contractor starts the work and discovers additional damage to the property that is not accounted for in the original scope from the insurance company (i.e. bad decking under the shingles, broken skylights, missing flashing, leak in the ceiling etc.). A supplemental claim must be filed to the insurance company if you want to get paid for any additional work not listed in the insurance company’s scope of work.
Tip: It is very important that approval is obtained from the insurance company before any of the additional work completed or your insurance company may not pay for this additional work. Keep your insurance claim adjuster handy during the repair.
Tip: Documentation is very important while filing a supplemental insurance claim especially if a considerable time has passed since the original claim. It’s a good idea to take and keep as many photos as you can.
Part 3: Your insurance company will issue you a second check for the Recoverable Cash Value (RCV) of the claim which is what it will actually cost you to get the job done. This check will only be issued after a completion form and the invoice is submitted to the insurance company. Any approved supplemental insurance claims will be paid at this time as well. Your QLC will help you through this process.
Dealing With the Mortgage Company
If your check is made out to your mortgage company, keep these things in mind to speed up the process:
- Before you mail anything to your mortgage company/bank, contact them and develop a point of contact that you can utilize through the whole process.
- Do not endorse the check unless the mortgage company specifically says you have to. I’ve seen the funds kept for months because they were not in any hurry to return the money. If you don’t have a specific point of contact, there is a much higher probability for your check to get lost in the system.
- Overnight the check and any required paperwork with a pre-paid return envelope made to the attention of your point of contact at the mortgage company.
Paying Your Contractor
Normally your Qualified Local Contractor will not require you to come out of pocket for any of the repairs until you have received the money from your insurance/mortgage company. Once you receive your first check, the contractor will order materials and begin your restoration project. Once the restoration is completed, the QLC will help invoice the insurance company and/or mortgage company and will wait for payment until you receive the final check.
Even more importantly, the insurance company and you (with the help of your contractor) must have a final written agreement (as to what work will be done)and the cost associated with that work before you enter into a contract with a contractor, because the insurance company does not legally have to pay you anything that they don’t agree to upfront. So it is the contractor’s responsibility to make sure that everything is included in the insurance scope of work before the work commences.
Note: The insurance is only liable to pay what it costs you the homeowner to get the work done. If the insurance says they will pay you $10,000 for the work and you get it done for $8,000, you will only receive $8,000 minus whatever your deductible is. If a contractor invoices the insurance company for more than he/she charged you, it’s a fraud which is a misdemeanor for the contractor but a felony for the homeowner.
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