As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.
3+ years experience in insurance and personal finance editing
Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.
Updated November 1, 2024 | Reading time: 4 minutes
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When you file a home insurance claim, your insurer will send you a payment to cover the damages based on your policy terms. In some cases, you might have leftover money after paying for the necessary repairs.
In many cases, you can keep this money, as long as you don’t misrepresent your losses. Whether you can keep it can also depend on your home insurance policy details and your state’s laws.
Here’s what you need to know about the home insurance claim process, including how it works and what to do with any leftover money.
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Let your insurer know about the damages right away. Provide as many details as possible, including photos, proof of ownership, a police report if applicable, and other evidence.
2. File your claim
Fill out the necessary forms to submit your claim. Once you submit your claim, the review process will start.
3. Meet with the adjuster
Your home insurance company will likely send a claims adjuster to complete a home damage assessment. Work closely with them to show and explain the extent of the damage.
4. Receive your home insurance payout
Once you and your insurer are on the same page, you’ll receive your home insurance claim payout for your damaged personal belongings and personal property. Depending on where you live, the money will either go directly to you or to the general contractor fixing your damages. You may also receive additional living expenses money, depending on your damages.
5. Complete the repairs
Use the claim funds to complete your repairs. You can either keep or return any leftover money, depending on your insurance policy terms.
When does an insurance claim lead to leftover money?
Insurance claims can lead to leftover money in a few instances, including:
Low repair costs: If the cost of repairs for your damages is inexpensive, you might end up with some leftover money. This can happen if you find an affordable contractor to do the work for less than the typical rate or with cheaper materials.
Only doing partial repairs: Some homeowners may only choose to use the money for part of the repair work. They may keep the remainder for themselves, either not fixing certain damages or completing the remaining repairs on their own.
Replacement cost payouts: In some cases, insurers initially pay outactual cash valuebut after repairs pay full replacement value for damaged items. This can often lead to a surplus.
Can you keep leftover money from a claim?
You can keep leftover money from a homeowners insurance claim in some cases. Whether or not you can keep excess claim money depends on your policy details and state laws. Some policies specify that policyholders must use repair funds solely for repairs, meaning that any excess funds must go back to your insurer.
Some states also have laws that require homeowners to provide proof that they used the full claim amount for repairs. But this isn’t the case everywhere. Look up the laws in your state and examine your home insurance policy closely. In many cases, you can keep the extra money if your insurer doesn’t ask for it back.[2]
Though having leftover money from a home insurance claim is somewhat rare, it can happen. If you have leftover money, you should take the following steps:
Check your insurance coverage and state laws. Find out if you can keep leftover money and what the guidance is around handling it.
Talk to your adjuster. You typically have to tell your insurance adjuster about the leftover claim money for policy compliance.
Provide repair details. You should document and report your repair expenses in detail, including receipts and invoices.[3]
Know your deadline. Your policy may have a deadline to use the payout money, so make sure you know your policy’s window and complete the repairs within it. If you’re not sure what to do, call your insurance agent.
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When you can’t keep leftover money
If your policy or state’s laws explicitly state that you must use the payout money for its intended purpose, you can’t keep any leftover money. Your home insurance company may also require that you fully restore your damaged property. Not completing the needed repairs and keeping the money is insurance fraud.
Likewise, it’s also fraudulent to use payout funds for expenses not related to property damage, such as vacations or other personal purchases. Only use your payout funds to cover the actual cost of repairs. If you have any leftover money, refer to your homeowners insurance policy and state laws to know what to do.
Leftover insurance claim money FAQs
The following information can answer your remaining questions about what to do with leftover insurance money.
What happens to money left over after your insurance claim?
It depends on the terms of your insurance policy and state laws. In some cases, you can keep excess money left over, but sometimes you’ll need to return the remaining settlement amount to your insurer.
Does a mortgage company keep leftover insurance money?
It depends on your loan terms. In some cases, a mortgage company may keep leftover insurance money. The company may also keep your claim money in an escrow account while your repairs progress, depending on your mortgage agreement.
Can you use leftover money from a house loan?
No. You’ll never have leftover money from a house loan as your mortgage lender will lend you up to what you need.
Can you cash out on your home insurance claim?
In some cases, yes. You can cash out on your homeowners insurance claim by not completing all repairs. It depends on your policy and state laws.
Can you negotiate your insurance claim amount?
Yes. You can negotiate your home insurance claim amount if you feel it’s inadequate. You’ll likely need to provide additional evidence or estimates to strengthen your case for an increased amount of money.
Danny is a Brooklyn-based writer with a producer’s license for property and casualty insurance. A former editor at Insurify, he specializes in auto, home, and pet insurance. He works to translate his insurance expertise into digestible, easy-to-understand content for drivers, homeowners, and pet owners alike.
Edited byKatie PowersAuto and Life Insurance Editor
Katie PowersAuto and Life Insurance Editor
Licensed auto and home insurance agent
3+ years experience in insurance and personal finance editing
Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.
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