Tornado Damage and Insurance Claims?

Question

We had a bunch of tornado damage on our house. They paid us a pretty penny for our claim, but we don't see it necessary to repair some of the damage that was done. Do we have to repair it since they paid or can we spend it how we see fit? Can we use insuarance claim money however we want to is my question. Thanks in advance.

Answer 1

"Tornado Damage and Insurance Claims?

We had a bunch of tornado damage on our house. They paid us a pretty penny for our claim, but we don't see it necessary to repair some of the damage that was done. Do we have to repair it since they paid or can we spend it how we see fit? Can we use insurance claim money however we want to is my question. Thanks in advance."

Here is the answer in black and white.

If the insurance paid you for damages sustained by an "act of god", you must use the money for said repairs.

If they paid you 10k to replace your roof and you get it done for 4k then you owe the insurance company the $$ back.  You have not won the lottery.  If a homeowner makes a profit on an insurance claim, it is considered fraud.  This can carry a felony charge and a mandatory minimum sentence.  State farm Insurance audits 10% of its claims to prevent this type of fraud.

Get you repairs done by someone reputable, not "uncle Joe".  The insurance will pay you fair market value for a reputable contractor, get the best.

Answer 2

You can spend it how you see fit.  And if you don't repair the outside of the house, they can cancel your policy.  

And if you have unrepaired damage, no one else is going to insure you.  

So you have to weigh that, against "what you see fit".  For most people, fixing the house is fit.

Answer 3

You can do with it what you please but if another storm rolls thru and you have existing damage then you won't be paid the 2nd time around. I was told that by my insurance agent. They note what damage you have and I'm sure will compare it if new damage occurs.

Answer 4

The Insurance company is likely to RE-inspect the house after the damages are repaired.

As long as it's repaired well enough to pass the inspection it should be fine...

You might want to get with your insurance agent about what the inspection will check for (each company is a bit different)..

BUT BEWARE doing this - if it's not repaired well enough that further damages won't come "easier"... another claim in the future could be turned down!

For example: if you haven't fixed a slow leak well enough and it slowly ruins a wall or hard-wood floor... it won't be covered when you try to put in a claim to fix the wall/floor!