Can I Save Money From Insurance Settlement by Repairing the Home for Cheap?

We had substantial wind damage to our house, and the insurance company gave us a settlement check for $12,000. Can I keep some money if I can get the repairs done for less than that amount?

It is surprising how many people have this in their mind. Of course you can pocket the difference, it is perfectly legal and a totally misguided way of handling your property repairs. Homeowners in most cases lose substantial amounts by doing this.

To understand this we need to review two terms: Actual Cash Value and Replacement Value.

Actual Cash Value or the Depreciated Value is the amount your insurer estimates as the loss your property suffered. For example if you have a 5 year old window you bought for $2000 new then depreciated value would be $1500. This is the amount your insurance company pays you upfront.

Replacement Value is the estimated amount it costs to replace your loss with new and comparable items. In the example if the same window now costs $2500 now then your Replacement Value is $2500. You will get the difference only after completing the repairs and submitting the receipts. Remember you are paying additional premium to have replacement coverage.

If you replace your window with an older one that costs $1000 and pocket the $500 difference but it will impact the value of your property. Here you have an opportunity to replace a 5 year old window with a brand new one. By using cheaper option you left $1000 to the insurance company.

The same discussion is true when you are selecting a contractor who will do a high quality job or a contractor who will quote you the lowest price to get the job done. If you settle for cheaper repairs you only have yourself to blame for the problems that will develop in near future.

Please visit for an excellent free tool that helps you find out whether you got full settlement in 5 minutes of less. You will also find additional insights into home insurance claims. You can also ask an expert any questions about your home insurance claim.