As you navigate a fire insurance claim, it helps to always keep your eye on the end goal: rebuilding your home and recovering your lost belongings at the lowest cost to yourself. Part of that process is making sure you get the most financial help from your insurer possible. How you go about the recovery and rebuilding process is just as important.
This guide tackles some of the most common issues people face during a fire insurance claim and the different options available to them when they start to rebuild.
#1 Getting Help from an Insurance Lawyer or Public Adjuster
With a large or complicated claim, it is sensible to hire an insurance lawyer or public adjuster to help. Both of these professionals focus on large homeowners’ insurance claims. They can:
- Help you understand the details of your insurance claim
- Assist with paperwork, deadlines, and meeting your own responsibilities in a claim
- Help you negotiate with the insurance company for an appropriate settlement
- Navigate issues such as hiring your own contractor or taking a cash settlement
Only an insurance lawyer can help with issues such as third-party liability or suing the insurance company if it is impossible to come to a resolution.
You can learn more about the difference between insurance lawyers and public adjusters at Virani Law, a Canadian law firm that handles home insurance claims and helps homeowners negotiate with their insurers.
#2 Working with Your Own Contractor vs. the Insurer’s
In most cases, the insurer will have a list of preferred contractors that they turn to when there is fire damage to repair. Insurers often request quotes for the job from this list of preferred contractors and base their settlement for the Structure part of your policy based on the lowest quote.
Some homeowners do not like losing control over the choice of contractor and would prefer to work with their own. This can complicate things. If a homeowner insists on working with their own professional, the insurer may provide them with a cash payment and make them responsible for all the repairs. Unfortunately for the homeowner, this leaves them fully responsible for any cost overruns. It is important to remember that the settlement is based on the lowest estimate provided.
You may be able to persuade the insurance company to work directly with the contractor of your choice in the same way they would with their own preferred professional. An insurance lawyer can help facilitate this relationship between your contractor and the insurance company to help navigate any disputes or issues that may arise.
#3 Reimbursement from the Insurer vs. Cash Settlement
Receiving a lump sum settlement paid out in one cheque from the insurer is rarely how the process works. Usually, you will have to submit receipts for belongings you’ve replaced and Additional Living Expenses, and the insurer will reimburse you according to your policy.
When it comes to money for the structural repairs, the funds may go directly to the contractor, or your mortgage lender may be co-payable. If this is the case, then the funds will go to the bank before they flow to you.
However, there are cases where you can agree to a lump sum cash payment instead. You may prefer to get a cash payment for your Contents insurance instead of replacing every lost belonging and getting reimbursed for them. A cash payment tends to lead to a lower payout, but it makes sense if you do not intend to replace everything.