Can I apply insurance $$ toward related repairs I do myself?

Message Author
ampm-bookmark
delicious-small Add to delicious
yahoomyweb-small Add to YahooMyWeb
blinklist-small Add to BlinkList
PostPosted: Sat Feb 06, 2010 12:18 am   Post subject: Can I apply insurance $$ toward related repairs I do myself?  

Our house sustained water damage due to a toilet overflowing and running several hours while we were away. The insurance adjuster said they will replace the carpet and pad in the affected rooms. They also will pay to re-grout the ceramic tiled floor. They are having a carpet sample analyzed to determine the carpet grade before writing us a check. They are encouraging us to agree to use one of their preferred contractors to complete the repairs. Here are my questions:



1. When we bought our house 4 years ago we had planned on putting in hardwood floors when the carpet needed replacing. Under the circumstances I would like to apply the amount the insurance company would allow for carpet toward hardwood floors. Since I can’t afford to have hardwood floors professionally installed I’m willing to do the work myself to offset the cost. Although not a professional contractor, I am an experienced handyman. I’ve completed several remodeling projects including building custom cabinets and take pride in my workmanship. All this to say I would not do a sloppy job. Would the insurance company allow me to do the work myself? If so, can I just apply what they would pay a contractor to myself? Or do I need to notify them of my intentions and keep them updated on my progress as I complete the job?



2. I also had planned on eventually replacing the ceramic tile. I want to use the money they’ve allowed for re-grouting to go toward re-installing a better quality tile myself. Would this be ok? It doesn’t make sense to spend this $$ doing work which will ultimately be redone anyway.



3. I do have replacement coverage but am not sure what is or isn’t included under recoverable depreciation. If the insurance company doesn’t pay the full replacement cost for new carpeting until I’ve met my deductible and provide receipts to prove the work has been completed, how should I proceed? I’ve already met my deductible paying the clean up crew. If I do the work myself and pay for hardwood floors instead, will I be able to recover this depreciated amount? The cost alone in materials should more than cover the amount they will be withholding due to depreciation.



THANKS IN ADVANCE!


_________________
Register Now to have your Insurance queries solved.
MrHandyman
Guest







PostPosted: Sat Feb 06, 2010 1:53 pm   Post subject:   

I'm assuming you have a mortgage, if you do not, then what I'm about to say, doesn't pretain.



Tell the carrier what your plans are...well, wait, first ask them if they will make the draft payable to you only (that's where the mortgage company comes in)..if not and they have to include either the mort. co. or a licensed contractor, tell them you'll get back to them. Then call your mortgage company and ask how they would go about releasing these funds to you, since you want to complete the work yourself...If that's too big a pain, then tell the adjuster exactly what you've told us..and see how they will handle it..many many many people complete their own repairs...they will likely remove the mark up from the estimate...as to the recoverable depreciation, they will require the receipts to release those most likely...first though I'd contact my mortgage company...if that's not going to be too big a pain to get them to endorse the draft, that's the route I'd go.



_________________

"Never, never be afraid to do what's right, especially if the well being of a person or animal is at stake. Society's punishments are small compared to the wounds we inflict on our soul when we look the other way." Martin Luther King Jr.
Lori
Forum Expert
Leave a quick message

Lori
Forum Expert

Joined: 10 Sep 2007
Posts: 8080

Location: Missouri
287.93 Dollars($)

PostPosted: Sat Feb 06, 2010 3:54 pm   Post subject:   

Thanks Lori,

No - I do not have a mortgage, I own my house outright.

I'm trying to figure out which way I will come out ahead, while at the same time stay within legal limits.



If I cash the initial check the insurance company gives me - this will most likely contain inflated prices for the contractors labor charges but not include the recoverable depreciation.



If I do the work myself and they lower the amount paid for labor (even though laying hardwood floors is much more labor intensive) - would I come out ahead? As far as recovering the depreciated value I could do that pretty easily with receipts for materials for the hardwood floors as well as tile - if the insurance company would allow these receipts to apply. If they would not - then I might be better off just doing the work myself with the initial settlement claim they give me - provided this is acceptable and legal. Is it?



I have already met my deductible, and would be using the funds to repair the damage - it’s just that I would repair to a state that is much better than I had to begin with. Is there anything wrong with that? Would I need to document my progress with pictures and/or receipts?


_________________
Register Now to have your Insurance queries solved.
MrHandyman
Guest







PostPosted: Sat Feb 06, 2010 4:43 pm   Post subject:   

Quote:
No - I do not have a mortgage, I own my house outright.
Ok then, problem solved, (and I'm jealous---five more years, five more years..and we'll be done too Smile They can pay you directly...just tell them you want the draft payable to you ONLY and that you will arrange your own repairs, you may decide to do it a little at a time..I (personally) wouldn't go into who (you) is repairing it..Frankly, with no mortage it's none of their business.. Wink
Quote:
I'm trying to figure out which way I will come out ahead, while at the same time stay within legal limits
Of course you are, and there's nothing wrong with that..
Quote:
If I cash the initial check the insurance company gives me - this will most likely contain inflated prices for the contractors labor charges but not include the recoverable depreciation.
right...
Quote:
If I do the work myself and they lower the amount paid for labor (even though laying hardwood floors is much more labor intensive) - would I come out ahead?
I doubt it...because they will deduct a LOT of the labor ALL of the overhead, and profit..
Quote:
provided this is acceptable and legal. Is it?


yep..
Quote:
I have already met my deductible
What do you mean by that? You understand that there is a deductible PER claim..and NOT per year right? They would've simply deducted your deductible from their payment...
Quote:
would be using the funds to repair the damage - it’s just that I would repair to a state that is much better than I had to begin with. Is there anything wrong with that?
Absolutely not! Nothing wrong with that at all, and in fact I'd say the majority of folks do upgrade when claims like this occur..It's just that the carrier only owes you for what you HAD, not what you intend to replace it with...
Quote:
Would I need to document my progress with pictures and/or receipts?
I doubt it, but ask your carrier what 'type' of documentation they will require for the recoverable depreciation...Here's another thing though..let's say the contractors bid is 10k, they pay you 8k withholding the depreciation...but you repair it for a total of 6k...then there would be no recoverable depreciation..see what I mean? All carriers (and states) handle their recoverable depreciation differently, so I'd ask them point blank, 'what do you all need in order for me to recover this depreciation?'



What state are you in? I'll check and see if there is anything on the 'books' about it.


_________________

"Never, never be afraid to do what's right, especially if the well being of a person or animal is at stake. Society's punishments are small compared to the wounds we inflict on our soul when we look the other way." Martin Luther King Jr.
Lori
Forum Expert
Leave a quick message

Lori
Forum Expert

Joined: 10 Sep 2007
Posts: 8080

Location: Missouri
287.93 Dollars($)

PostPosted: Sun Feb 07, 2010 1:50 am   Post subject:   

I live in Texas. Good to know I can upgrade and do the work myself. That will help quite a bit.



I understand that I can’t recover more than I spend, but as expensive as hardwood flooring and travertine tile are - I’m guessing I won’t have much trouble spending enough to recover the depreciation. That is if they will accept receipts for these materials instead of carpet installation. Do insurance companies allow this?



As far as the deductible is concerned, it was met when I paid the clean up crew. They came in and tore out the old wet carpet and pad, set up fans and de-humidifiers and charged me my deductible on the spot. They will file with the insurance for the rest of their payment. The adjuster said it will all be covered. I have an invoice and receipt from them as proof that it was paid.



Lori, thanks for taking the time to give me detailed answers to my questions. Hang in there, you’ve almost made it - five years will go by very quickly!


_________________
Register Now to have your Insurance queries solved.
MrHandyman
Guest







PostPosted: Mon Feb 08, 2010 12:03 pm   Post subject:   

Quote:
That is if they will accept receipts for these materials instead of carpet installation. Do insurance companies allow this?
I'm not sure, this is kind of one of those, 'carrier to carrier' things, I'd allow it, but I'm not handling your claim Wink ...I'd just ask the adjuster what they need to recover it, (they will say paid receipts) then ask, 'what if I chose to upgrade? the same amount (or more) will be spent is that ok for proof?'

see what they say.
Quote:
As far as the deductible is concerned, it was met when I paid the clean up crew
Oh, ok...got it..
Quote:
Lori, thanks for taking the time to give me detailed answers to my questions
Our pleasure, don't hesitate if you have any other questions.
Quote:
Hang in there, you’ve almost made it - five years will go by very quickly!
Ain't that the truth! Shocked what is it about age, the older you get the faster time goes? Rolling EyesLaughing


_________________

"Never, never be afraid to do what's right, especially if the well being of a person or animal is at stake. Society's punishments are small compared to the wounds we inflict on our soul when we look the other way." Martin Luther King Jr.
Lori
Forum Expert
Leave a quick message

Lori
Forum Expert

Joined: 10 Sep 2007
Posts: 8080

Location: Missouri
287.93 Dollars($)

PostPosted: Mon Feb 08, 2010 10:19 pm   Post subject:   

See what they say, but I used to release the holdback amount with reciepts for upgrades. I always made sure the insured understood that they were only going to recover the holdback based on the original estimate and not the difference between the initial payment and the upgrade. In some cases, I would just cash out the entire claim so I could close the file and there would be no holdback.



I never cut back on labor, but would exclude overhead and profit. You may want to check with the TDOI, but somewhere I read that overhead and profit had to be included in every payment....no matter who was doing the repairs. I could be wrong as I have never worked in TX.



_________________

Can I say I’m working if I stare blankly at my computer all day?
Dasfuk
Senior member
Leave a quick message

Dasfuk

Joined: 27 Feb 2008
Posts: 606

Location: Ohio
24.95 Dollars($)

PostPosted: Tue Feb 09, 2010 12:54 am   Post subject:   

Quote:
but I used to release the holdback amount with reciepts for upgrades
I always did too Das, as long as the bottom line was the same or higher, I was good.


_________________

"Never, never be afraid to do what's right, especially if the well being of a person or animal is at stake. Society's punishments are small compared to the wounds we inflict on our soul when we look the other way." Martin Luther King Jr.
Lori
Forum Expert
Leave a quick message

Lori
Forum Expert

Joined: 10 Sep 2007
Posts: 8080

Location: Missouri
287.93 Dollars($)

PostPosted: Thu Feb 11, 2010 3:16 am   Post subject:   

I received the settlement check today. The insurance company has itemized and depreciated it all separately. Every item (including each individual labor cost) was depreciated by almost 40%! Although our carpet was 6-7 yrs old, since most of it was in a master bedroom and formal living areas it was in almost new condition before the water damage. They are also paying to replace and paint some trim which I could do myself easier than hiring someone. I must admit I am disappointed at the rate of depreciation. 40% seems like a lot. Is this normal?



A letter attached to the settlement explained that in order to receive the replacement cost I must complete the repair within 2 yrs, notify them within 30 days after completion, and prove completion by submitting invoices and receipts. Also it says I must pay them the difference if I select a contractor who charges less than they have estimated. It seems like they want me to follow their instructions exactly for repairing my home and are holding out full payment to make sure it’s done their way.



Bummer! I had hoped to do most of the work myself and apply the extra money towards upgrades.

Since each item is depreciated separately on the settlement papers, does that mean the cost will be recovered separately as well?



Having no mortgage and therefore being under no obligation to disclose my plans, I’m wondering if under these circumstances it might be in my best interest to just accept the ACV settlement. I don’t want my payment reduced even further.



As much as I hate to give up my right to the full amount for replacement it seems I may not have much choice if I plan to go ahead with my plans to upgrade and do the work myself - which is even more of a necessity now due to the depreciation. I’ve searched the TDOI website for any related rule or regulation that might help but haven’t found anything yet. I’ll give them a call tomorrow.



This seems wrong - After all, it is my home and I’m only trying to improve it’s condition. If I’m willing to pay the difference to upgrade to hardwood floors (and do the install myself) shouldn’t I be allowed to do so without forfeiting the $$$. I’m not trying to cheat anyone or make a profit on the insurance company. I’ve been with the same company for several years and always paid my premiums on time - am I missing something here? It doesn’t seem right.


_________________
Register Now to have your Insurance queries solved.
MrHandyman
Guest







PostPosted: Thu Feb 11, 2010 12:01 pm   Post subject:   

40% sounds a little high to me for 6-7 year old carpet, assuming it's high quality. I don't have a depreciation guide anymore, since I don't handle these claims any longer....Tcope, anyone else have a current depreciation guide? Let's see if someone has a current one....I'd think that above 'avg' gradee would have a life expectancy of more than 10 years..which is what they are saying...maybe not...one way for you to know for sure would be to call the place you bought if from..and ask them...what the life expectancy with normal wear is..



Quote:
It seems like they want me to follow their instructions exactly for repairing my home and are holding out full payment to make sure it’s done their way.
That is a bummer! Pretty smart though huh? Wink What they are making sure of is that they don't pay for more than what was damaged I guess.
Quote:
Since each item is depreciated separately on the settlement papers, does that mean the cost will be recovered separately as well?
Each item, such as, the carpet and pad are one..the painting is one, the trim is one...not the carpet-is one, the carpet labor is one, the carpet profit is one...
Quote:
it might be in my best interest to just accept the ACV settlement. I don’t want my payment reduced even further
Your ACV amount would be the same...right? I guess I don't understand how that could be different? Another thing, have you 'checked' to make sure their figures are correct on the materials?
Quote:
This seems wrong - After all, it is my home and I’m only trying to improve it’s condition. If I’m willing to pay the difference to upgrade to hardwood floors (and do the install myself) shouldn’t I be allowed to do so without forfeiting the $$$. I’m not trying to cheat anyone or make a profit on the insurance company. I’ve been with the same company for several years and always paid my premiums on time - am I missing something here? It doesn’t seem right.
I couldn't agree more, and have ALWAYS thought recoverable depreciation on an replacement cost policy is b.s. It didn't used to be this way...In my state this started, I dont' know maybe ten years ago....Call your state DOI consumer line..see what they say....let us know if there's a loop hole so others can benefit...


_________________

"Never, never be afraid to do what's right, especially if the well being of a person or animal is at stake. Society's punishments are small compared to the wounds we inflict on our soul when we look the other way." Martin Luther King Jr.
Lori
Forum Expert
Leave a quick message

Lori
Forum Expert

Joined: 10 Sep 2007
Posts: 8080

Location: Missouri
287.93 Dollars($)

PostPosted: Thu Feb 11, 2010 5:02 pm   Post subject:   

We bought our house 4 yrs ago (late 2006) and the carpet was new (or never used) at that time. The house had sat on the market unoccupied for 2 yrs before then. A neighbor told us that the previous owners had installed the carpet before moving and putting the house up for sale, so I’m not certain of it’s exact age or initial cost, but I estimated that it was probably around 7 years old. HOWEVER, we didn’t move into the house for almost a year after buying it - (trying to sell our previous home.) It sounds complicated, but bottom line is, that although the carpet is technically probably around 6-7 yrs old, it wasn’t used at all for the first 3 of those yrs. And to top that off, all but one room that was affected was in formal living areas or rooms which were seldom used. Honestly, this carpet was in exceptionally good condition, which is why we didn’t want to just rip it out to begin with and replace with hardwood floors. Our original plan was to wait until it needed replacing and then upgrade. Having said all that, I do believe that it was only a mid-grade carpet.



The reason I asked about recovering the depreciation separately is because it was itemized separately. For instance, the estimate for the formal living area (which BTW is depreciated by 45%!) is divided into 3 parts. (Carpet, Remove Carpet, and R&R Carpet pad). Each item has a RCV, Deprec.,and ACV amount.



I had hoped to be able to recoup most of the depreciation (on the total claim) through the material cost for upgrading to hardwood flooring on a portion of the claim. If the depreciation has to be recovered separately for each item, then I’m not sure if I can use the extra cost for hardwood flooring in the formal living and dining room to recover the depreciation amount for labor and/or materials in another area like trim and painting or re-grouting. I hope I’m making sense.



Although I don’t agree with the depreciation of materials on a replacement policy, I do understand the logic … but I don’t get the logic behind depreciating the labor charge (R&R Carpet pad, Remove Carpet - together they total to $113 for a 20x20 room). How do they explain depreciation on labor charges? It’s either what it is or it’s not - labor doesn’t depreciate with time or wear does it?



Also I don’t see a line item amount for carpet installation, unless it’s included in a section titled “adjustments for Base service charges” on the last page under “flooring installer” for $92. That doesn’t seem like very much to pay for carpet installation for 5 rooms, 2 halls and closets?!? Unless overhead and profit is included here, there is no separate itemization for it. The insurance adjuster didn’t explain any of this, just sent me a check with a dozen pages of settlement figures and the written explanation of the depreciation and recovery that I referred to yesterday.



When I said I don’t want my payment reduced even further, I was referring to them deducting more for labor charges if I do the work myself. Maybe I’m confusing overhead and profit with labor…… It seems they have already depreciated labor (at least some of the labor).



I’m let you know what I find out after talking to the TDOI and/or my adjuster.



I’ll double check the measurements to make sure they are accurate. I’d appreciate any other advice or suggestions. (Even encouragement - what a headache!)



Thanks again.


_________________
Register Now to have your Insurance queries solved.
MrHandyman
Guest







PostPosted: Thu Feb 11, 2010 5:25 pm   Post subject:   

30 to 40% on carpet that is 6 or 7 years old is about what I would take. I really don't see how they took deprecation on labor (I think TDOI) would have something to say about this.



Did you discuss your plans with your adjuster? What did they say besides the letter you sent?



I don't see where you will have a problem as long as you save all of your receipts showing that flooring was replaced, trim painted and what ever else was damaged was repaired. They should then take the receipts and see that you spent more then the estimate and pay out the holdback.





I see you just posted again.



I assume that you estimate reads



Carpet - x amount of dollars then the depreciation amount

Remove carpet - x amount of dollars

R&R carpet pad - x amount of dollars then the depreciation amount



The "carpet" section should have the labor included for the installation.



As for the condition of the carpet...really the adjust can only go by the approximate age of the carpet since they could not see it before the loss. The amount they held back really shouldn't matter as long as you have the flooring replaced, either by hardwood or carpet and pad.



DO NOT SETTLE FOR THE ACV AMOUNT. You are owed full replacement as long as you replace the items and pay for the additional upgrades yourself, which you seem to understand. The only area you may be out is in overhead and profit.



Talk to the adjuster and if you don't seem to get the answers you are looking for, call TDOI.



Also, in your example of your 20x20 room for $113. How much is the depreciation in dollars. Could it only be accounting for the replacement of the pad and not the actual labor. Most estimating software has an option to only depreicate materials but does not show it on the print out.



_________________

Can I say I’m working if I stare blankly at my computer all day?
Dasfuk
Senior member
Leave a quick message

Dasfuk

Joined: 27 Feb 2008
Posts: 606

Location: Ohio
24.95 Dollars($)

PostPosted: Fri Feb 12, 2010 12:34 pm   Post subject:   

Quote:
I really don't see how they took deprecation on labor (I think TDOI) would have something to say about this
I agree, unless they are taking it line by line rather than in a lump sum...ie-'remove and replace carpet in bedroom=1000.00 less 40% depreciation" I still don't follow their logic though.
Quote:
The "carpet" section should have the labor included for the installation
Check this..if it has carpet (which includes installation labor) for 10bucks a square yard..you know there's a mistake..further, they should be telling you WHERE you can buy this carpet and get it done for this price..might not be a bad idea, to take sections of your carpet to this store, and make sure we are talking 'grade to grade'.



What is the TOTAL amount of their estimate (including recoverable depreciation)? Are you going to be spending this in your upgrades, (subtracting the removal which would be owed to you)? If so again, ask the adjuster (and TDOI) if you provide receipts for this, (and pics if they'd like) will there be any issue with you being reimbursed?


_________________

"Never, never be afraid to do what's right, especially if the well being of a person or animal is at stake. Society's punishments are small compared to the wounds we inflict on our soul when we look the other way." Martin Luther King Jr.
Lori
Forum Expert
Leave a quick message

Lori
Forum Expert

Joined: 10 Sep 2007
Posts: 8080

Location: Missouri
287.93 Dollars($)

PostPosted: Sat Feb 13, 2010 6:05 pm   Post subject:   

Per my example of the 20x20 room: Actually I re-measured and it is 20’3” x 17’4”. (I approximate the SF at 351 with no allowance for overage). I don’t understand how the adjuster gets their measurements… it doesn’t match with mine. They said 309 SF floor but are allowing 349 SF quantity for carpet at 2.39 unit cost., .17 unit cost for 309 SF for removing carpet, and .50 unit cost for 309 SF for R&R carpet pad. Of the 3 items, each is depreciated individually. The total RCV for this room is $1043 with an ACV of $573 - thus making the overall depreciation $470. The $113 I referred to was the sum of the depreciated amount for removing carpet ($28 ) + the depreciated amount for R&R carpet pad ($85). I didn’t realize the carpet installation was included in the unit cost of 2.39 for the carpet.



The amount for RCV for this total claim is $6k and depreciation is $2500. If I replace 2 rooms with hardwood flooring, upgrade to travertine tile (instead of only regrouting) in 2 rooms, and upgrade to a better quality carpeting in the 3 other rooms, (even doing much of the work myself) then yes - I’m pretty sure I can accumulate more than $6k in receipts.



I have not talked with the adjuster yet about wanting to upgrade and do the work myself. Nor have I sent them a letter, only left a msg and am waiting for them to get back with me. In the meantime I talked with the TDOI. They said the insurance company has 15 days to reply. Patience is a virtue - right? With our home in such disarray, furniture pushed all around, carpet and pad removed and rolled back, stuff stacked everywhere, tack strips (OUCH!) exposed, etc, it helps keep perspective by reminding myself how small a matter this really is, especially when I hear about those poor families in Haiti…



Anyway, the guy at TDOI confirmed that I have a right to do the work myself and be compensated for labor - but I need to talk with my adjuster to find out what they’ll allow and how we need to proceed to recover our depreciation. He also wasn’t sure why they’re depreciating the labor. (Which they are). Evidently each company does it a little differently. I do have a right to upgrade to a better flooring but not to expect the insurance to pay extra for it (which I don’t). However he said the insurance company may not renew our policy if we don’t complete the repair as they specify.



He also said not all insurance companies withhold depreciation, but if it’s spelled out that way in our policy they have a right to do so until we prove the work has been completed. I checked our policy and we do have replacement coverage, but the terms are very general. It sets out limits, liabilities and deductibles. I talked with my agent and they said they would send me a more detailed policy. You are right, the depreciated amount doesn’t really matter as long as we can recover it. And right again, I need to talk with the adjuster before I can pursue much further with TDOI. I’m calling the adjuster again today. I’ll keep you updated on what I find out.



Thanks again for your help!


_________________
Register Now to have your Insurance queries solved.
MrHandyman
Guest







PostPosted: Sat Feb 13, 2010 10:13 pm   Post subject:   

Quote:
However he said the insurance company may not renew our policy if we don’t complete the repair as they specify.
I doubt that..they could non-renew if you didn't complete the repairs at all! But no way can they non-renew based on your improvements...



Be sure and remind the adjuster that the TDOI stated they CANNOT depreciate labor...well, maybe you'd better wait to read your policy first...let us know what your policy says (exactly( when you get it..


_________________

"Never, never be afraid to do what's right, especially if the well being of a person or animal is at stake. Society's punishments are small compared to the wounds we inflict on our soul when we look the other way." Martin Luther King Jr.
Lori
Forum Expert
Leave a quick message

Lori
Forum Expert

Joined: 10 Sep 2007
Posts: 8080

Location: Missouri
287.93 Dollars($)

Quick Reply
Your Name
Subject
Message body
All times are GMT
1, 2  Next  
Page 1 of 2


Get a Quote
Ask Community Experts

flash plugin

Quick Links

Must See

Community

Hot topics in forums

Latest in blogs

    Connection Error: Connection refused