Can I Use My Own Contractor on an Insurance Claim?

After property damage, many policyholders wonder if they can choose their own contractor for repairs instead of using one recommended by their insurance company. This choice significantly impacts the repair process and restoration quality. Understanding your rights and the steps for working with an independent contractor is key to navigating the insurance claim process. This guide covers reviewing your policy, selecting a contractor, submitting their proposal, and managing the repair and payment phases.

Understanding Your Policy and Rights

Policyholders have the right to select their own contractor for covered repairs. This right ensures you control who works on your property. While insurance companies often provide lists of “preferred vendors,” you are not obligated to use them. These lists consist of contractors with agreements with the insurer, often prioritizing cost savings for the insurer.

Your insurance policy outlines the terms and conditions related to repair work and contractor selection. Review sections regarding your “right to repair” or similar clauses. Some policies might include language giving the insurer the “option to repair” or “managed repair” clauses, allowing them to choose the contractor or dictate repair processes. However, even with such clauses, many jurisdictions uphold the policyholder’s right to choose, provided the contractor is qualified and costs are reasonable.

The repair contract will always be between you, the homeowner, and your chosen contractor, not between the contractor and the insurance company. This means you are responsible for managing the contractor and ensuring the work meets your expectations. While insurers may recommend contractors, they cannot force you to use a particular one or penalize you for selecting your own. Your decision to use an independent contractor does not affect your policy rates or claim denial, provided the process is followed correctly.

Choosing and Preparing Your Contractor’s Proposal

Selecting a qualified contractor is an important step in ensuring successful repairs. Begin by gathering recommendations from trusted sources and looking for contractors with experience in insurance repair work. Verify their credentials thoroughly.

Confirm any prospective contractor holds the appropriate licenses for your area and carries both general liability and workers’ compensation insurance. Requesting a “Certificate of Insurance” directly from their insurer provides proof of coverage. Check references from previous clients and review online testimonials to assess their reputation and quality of work.

Obtain multiple detailed estimates from different contractors to compare costs and proposed scopes of work. Each estimate should itemize labor, materials, and a clear description of the repair tasks. This detail helps ensure all damage is addressed and provides a strong basis for your claim. The estimate should align with your insurer’s damage assessment, but your contractor may identify additional necessary repairs or costs.

Submitting and Negotiating the Claim with Your Contractor’s Information

Once you have selected a contractor and obtained their detailed estimate, submit this information to your insurance company. You can submit the estimate through various channels, such as online portals, email, or traditional mail. Keep copies of all submitted documents for your records.

After submission, your insurance adjuster will review your contractor’s estimate. It is common for the insurer’s initial estimate to differ from your chosen contractor’s, often due to variations in pricing or scope of work. The adjuster’s estimate might use standardized pricing software, which may not always reflect local market rates or the full extent of damage. In such cases, negotiation becomes necessary.

Your contractor can discuss the scope of repair and associated costs directly with the insurance company. Be prepared to provide additional documentation, such as detailed breakdowns of materials and labor, photos, or a re-inspection by your contractor and the adjuster. If discrepancies persist, justify your contractor’s estimate by highlighting overlooked damage, specialized materials, or the need for a general contractor’s overhead and profit, which is around 20% for projects involving multiple trades.

Receiving Payment and Overseeing Repairs

Insurance payments for approved claims can be disbursed in several ways. Common methods include direct payment to the policyholder, joint checks made payable to both the policyholder and the contractor, or direct payment to the contractor. If you have a mortgage, the check may be issued to both you and your mortgage lender, as the lender has a financial interest in the property’s restoration.

Managing these funds requires careful attention, especially if payments are staged. Insurers often make an initial payment based on the actual cash value of the damage, with the remaining amount, representing depreciation, released after repairs are completed and verified. Understand the payment schedule and ensure funds are available as needed for each repair phase. Maintaining clear communication with your contractor and the insurer throughout the repair process is important.

Upon completion of repairs, conduct a thorough final inspection with your contractor to confirm all work has been done according to the agreed-upon scope and quality. Before making the final payment, obtain a lien waiver from your contractor and any major subcontractors or suppliers. A lien waiver is a legal document confirming payment has been received and waives their right to place a mechanic’s lien on your property, protecting you from future claims for unpaid work.