How to Work With a Contractor During the Claims Process

Choosing a Contractor for Insurance Work

Not all contractors are equally experienced with insurance claims. Look for contractors who have worked on insurance restoration projects before. They understand how adjuster estimates are structured, they know what documentation the insurer needs, and they can communicate effectively with both you and the insurance company. Ask candidates specifically about their experience with insurance work and request references from previous insurance claim projects.

Verify that any contractor you consider is properly licensed in your state and carries both general liability insurance and workers' compensation coverage. Request proof of insurance and verify it directly with the insurer. If a contractor is injured on your property or causes additional damage during repairs, their insurance covers it. Without proper coverage, you could be liable for these costs.

Get written estimates from at least two to three contractors before committing. Each estimate should be detailed and itemized, breaking down labor, materials, permits, and any specialty work. Detailed estimates serve double duty: they help you compare contractors on an apples-to-apples basis, and they provide ammunition if you need to dispute the adjuster's estimate with your insurer.

Be cautious of storm chasers and contractors who show up unsolicited after a disaster. While some are legitimate, others use aggressive tactics, perform substandard work, or create problems with your insurance claim. Legitimate contractors do not pressure you to sign contracts immediately, do not offer to waive your deductible (which is illegal in many states), and do not ask you to sign over your insurance check before work begins.

The Contractor's Role in Your Claim

Your contractor can be a powerful ally during the claims process. Their professional assessment of the damage and required repairs carries significant weight when compared to the adjuster's estimate. If the adjuster's estimate seems low, a detailed contractor estimate that explains why certain repairs cost more in your local market provides the evidence you need to negotiate a higher settlement.

Some homeowners invite their contractor to be present during the adjuster's inspection. This allows the contractor to point out damage the adjuster might miss, discuss repair methodologies, and provide real-time context about local material and labor costs. While not every adjuster welcomes this arrangement, it is within your rights to have a representative present during the inspection.

After the adjuster's estimate is complete, your contractor can review it and identify discrepancies. Common issues include the adjuster specifying cheaper repair methods that would not meet building code requirements, using outdated pricing that does not reflect current material costs, omitting necessary work like matching adjacent undamaged materials to the repaired area, and underestimating the scope of hidden damage that full demolition will reveal.

Understanding Insurance Repair Payments

Insurance repair payments often work differently from standard contractor payments, and understanding the flow of money helps you manage the process smoothly.

For structural repairs, the insurance check is typically made payable to both you and your mortgage lender. The lender has a financial interest in your property being properly repaired, so they control the disbursement of repair funds. Most lenders require you to endorse the check and send it to their loss draft department, which then releases funds in stages as repairs progress. Common release schedules are one third at the start of work, one third at the midpoint, and one third at completion after a final inspection.

If you have a replacement cost policy, the initial payment from the insurer covers the actual cash value of the damage, which is the replacement cost minus depreciation. Once repairs are completed, you submit your contractor's final invoices to the insurer and receive a supplemental payment covering the recoverable depreciation. This means you are out of pocket for the depreciation amount during the repair process and are reimbursed after completion.

Personal property replacement payments usually come directly to you without lender involvement. You replace the items, submit receipts, and receive any held-back depreciation once replacement is documented.

Managing the Repair Process

Before work begins, get a detailed written contract from your contractor that includes the full scope of work, materials to be used, the timeline for completion, the total cost, the payment schedule, and warranty terms. The scope of work should match what the insurance settlement covers. If additional damage is discovered during repairs, document it immediately and contact your insurer to file a supplemental claim before proceeding with the additional work.

Establish a payment schedule tied to specific milestones rather than arbitrary dates. A common structure is 10% to 30% at signing or material delivery, progress payments at defined milestones like demolition complete, framing complete, or drywall complete, and a final payment of 10% to 20% upon satisfactory completion and final inspection. Never pay the full amount upfront.

Keep detailed records throughout the repair process. Photograph the work at each milestone. Save all change orders, invoices, and correspondence. If the repair scope changes due to discovered hidden damage, document the additional damage with photos and get a written change order from the contractor before approving the additional work. Notify your insurer of any scope changes so they can adjust your claim accordingly.

Inspect the completed work carefully before making the final payment. Walk through every repaired area with the contractor and note any deficiencies. Reputable contractors will address punch list items promptly. Obtain lien waivers from the contractor and all subcontractors before making the final payment to protect yourself from claims by unpaid workers or suppliers.