AboutJames R. Berliner, CPCU Expertise My specialty is personal and busines insurance, relating to the property and casualty field. Homeowners, Auto, Business Auto, Workers Compensation, Business Interruption, Crime, Directors & Officers Liability, Employment Practices Liability, Professional Liability, General Liability, Umbrella Liability, etc.
Experience I am the owner of my own agency (established 1970), have obtained my CPCU designation, and am licensed in many states.
Organizations IIABA (Independent Insurance Agents and Brokers of America), CPCU Society, PIACT (Professional Insurance Agents of Connecticut - Board of Directors)
Question My roof was damaged in a recent hailstorm. My insurance company sent an adjuster and determined a total loss of--let's say $20K. My deductible is $4K. They computed "recoverable depreciation" of $2K, so the insurance company sent me a check for $14K.
I had one contract bid for the repair work, and he said he could do the work for $13K total. He said he's also prepare an invoice showing a total expense of $20K, so that I could get that $2K back in recoverable depreciation. From everything I've read, that is blatant insurance fraud, and I want no part of it. Is that correct?
I have had other contractors bid, and some are willing to do the work for signficantly less than $18K. In that case, I would not have spent the total $4K deductible out of my pocket. Is that insurance fraud also? Am I obligated to pay the entire $4K deductible? If a contractor can do the entire job for $14K, it is legal for me to keep the deductible (essentially pay nothing out of pocket)?
Answer Hi Chris,
For your first question, yes - that is insurance fraud.
For the second question, if you can find a contractor that is willing to do the work for less than the insurance company is going to pay you, it is OK to go ahead and accept the money from the insurance company. If you want to take it a step further, you can accept the money from your carrier and NOT have any repair work done. You are being compensated for the loss to your property, not necessarily the repair cost (unless your choose to repair and then make the additional claim against your insurance company for the actual replacement cost)
Another item to consider would be the possibility that you are not having as extensive a repair done as the carrier is paying you for, and that is OK as well. Either way, stay away from the first scenario...
