Leftover Money From a Home Insurance Claim?: What To Do

Posted on April 8, 2024


Frances Badayos | author

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ICHQ | Site Author

When harsh weather or a fire damages your Louisiana home, your thoughts likely turn to insurance coverage and filing a claim as soon as possible.

When the insurance check arrives, and you make repairs, you may find money left over. This can lead to many questions, such as whether you can keep leftover money from a home insurance claim. The answer depends on your insurance provider and their guidelines.

At Insurance Claim HQ, our Louisiana homeowners insurance lawyers serve New Orleans and the surrounding areas with honest, effective legal advice when you need it most. Contact us today.

Why Would You Have Leftover Money From a Home Insurance Claim?

Once the repairs on your home and property are complete, you may have cash from a homeowners insurance claim left over. This happens for several reasons, including:

  • The repair estimates were larger than the repair costs
  • You received discounts on your repairs
  • The cost of building materials came in under budget

The repair companies you choose and their recommendations can also affect the cost of repairs. However, before you decide to keep home insurance claim money, asking yourself a few questions first can help you avoid financial entanglements later.

Are There Laws in Louisiana About Keeping Home Insurance Claim Money?

No. Some repair contractors may tell you they must match repair costs to your insurance settlement total because doing otherwise is against the law; however, no Louisiana state law exists that verifies such an action.

The only law that prevents Louisiana homeowners from keeping leftover money from a home insurance claim is gaining the funds through fraudulent means.

If a contractor tries to inflate your repair bill to meet the total amount of your insurance money, you may want to get a second opinion from another repair company.

Can You Keep Extra Money From Insurance Claims?

Maybe. You should review your home insurance policy with a representative before you decide to keep any unused repair funds.

Some policies include a clause stating you must return any leftover money to the insurance provider. Referring to your policy before you spend the money can prevent future debt.

When Will I Know If I Have Leftover Claim Money?

After receiving the estimates from contractors, your insurance provider has likely paid out your claim. Review the repair records and checklist with your contractor and verify them before paying them and the company leaves your property.

Depending on who owns your home and which insurance company covers it, you may have little choice in repair contractors.

If you have an Option To Repair clause in your policy, the insurance company chooses its preferred contractors and repairpeople, which means your insurance controls the insurance claim fund. In this case, you may see little leftover cash.

What if a Mortgage Lender Owns My Home?

If a bank or mortgage lender owns your home, it may claim itself as the loss payee on your lending agreement. In this case, home insurance funds go to an escrow account, and the lienholder pays for repairs. While mortgage contracts vary, the lender controls the repair costs on your Louisiana home.

After a disaster damages your home, contacting your lender can help you understand their regulations regarding any leftover money from a home insurance claim. You may need to provide a damage history and other documentation before the lender can proceed.

Can I Use Leftover Money for Home Maintenance Costs?

If you want to make additional repairs on your home with leftover money from a home insurance claim once you ensure it belongs to you, this is a wise way to use the funds.

Consider making upgrades to your home that may lower your insurance premiums, such as:

  • Updating your plumbing
  • Installing a home security system
  • Smoke/carbon monoxide detectors for each level of your home

Ask your insurance representative about any home improvement discounts the company offers, and make a list of the ones that offer the greatest discount.

What Happens if You Don’t Use Insurance Money for Repairs on a Home?

If you own your home and receive insurance money, the company that holds your policy likely expects you to make the needed repairs in a timely manner and pass inspection. While no Louisiana law demands you use insurance funds right away or return any leftover money from a home insurance claim, making necessary repairs can keep you in good standing with your provider.

You can make repairs on your own instead of hiring a contractor, which is your right if you are the payee of the insurance money.

However, remember that some repairs, such as electrical wiring, are better left in the hands of a licensed contractor unless you have experience in the area. If your home does not meet the standards of your insurance adjuster, the company may not renew your policy.

Contact Us With Your Insurance Claim Case

No two Louisiana insurance companies offer the same policies or clauses about whether you can keep leftover money from a home insurance claim.

If you believe your provider is withholding claim funds that belong to you, contact our lawyers at Insurance Claim HQ using our online form or call us 24/7. We can help you reclaim what is yours.