If you hire a contractor, then that contractor may offer to handle your insurance claim.
Hiring a contractor for your insurance claim seems to make sense. The contractor deals with the insurance company so you don’t have to. The contractor cleans up your property, the insurer covers your claim, and you close the claim with minimal hassle.
Unfortunately, hiring a contractor for your insurance claim is not always a good idea. There are advantages and disadvantages to hiring a contractor for your insurance claim.
Here are some of the things to consider before hiring a contractor to deal with your homeowners insurance claim:
How It Works
Your property is damaged in a covered incident – like a fire or wind damage. You hire a contractor to fix the property to its pre-loss condition.
The contractor has an offer: if you sign the insurance claim to the contractor, then the contractor can deal with the insurer for you. The contractor repairs the property, the insurer pays the contractor, and everyone wins.
It sounds like a great system – but it can quickly lead to problems.
Some contractors are not legitimate. They’re unlicensed to do business in your state. They traveled to a disaster-struck region to take advantage of unsuspecting homeowners.
You sign your insurance claim to a contractor, the contractor does shoddy work (or no work at all), and you lose money (and live in a damaged home).
There’s an easy way to avoid this issue: hiring a reputable contractor. A reputable contractor can handle your insurance claim and eliminate downsides. For smaller insurance claims, it may be in your best interest to use an insurance claims contractor.
Pros and Cons of Hiring a Contractor for a Claim
The advantages and disadvantages of hiring a contractor for a claim include:
Pros
Cons
You could easily get scammed, as is the case when shady contractors travel to a disaster-stricken region and knock on homeowners’ doors (good contractors don’t need to do this)
Before signing your insurance claim to a contractor, be sure to research laws in your area. It could be a bad idea.
Hiring a contractor for your insurance claim seems to make sense. The contractor deals with the insurance company so you don’t have to. The contractor cleans up your property, the insurer covers your claim, and you close the claim with minimal hassle.
Unfortunately, hiring a contractor for your insurance claim is not always a good idea. There are advantages and disadvantages to hiring a contractor for your insurance claim.
Here are some of the things to consider before hiring a contractor to deal with your homeowners insurance claim:
How It Works
Your property is damaged in a covered incident – like a fire or wind damage. You hire a contractor to fix the property to its pre-loss condition.
The contractor has an offer: if you sign the insurance claim to the contractor, then the contractor can deal with the insurer for you. The contractor repairs the property, the insurer pays the contractor, and everyone wins.
It sounds like a great system – but it can quickly lead to problems.
Some contractors are not legitimate. They’re unlicensed to do business in your state. They traveled to a disaster-struck region to take advantage of unsuspecting homeowners.
You sign your insurance claim to a contractor, the contractor does shoddy work (or no work at all), and you lose money (and live in a damaged home).
There’s an easy way to avoid this issue: hiring a reputable contractor. A reputable contractor can handle your insurance claim and eliminate downsides. For smaller insurance claims, it may be in your best interest to use an insurance claims contractor.
Pros and Cons of Hiring a Contractor for a Claim
The advantages and disadvantages of hiring a contractor for a claim include:
Pros
- Can make the claim go faster and more efficiently
- You avoid dealing with your insurance company
- Ideal for smaller claims and reputable contractors
Cons
- It could be illegal; in Texas, for example, it’s illegal for a contractor to fully handle an insurance claim on behalf of a policyholder (states ban this practice due to a conflict of interest)
- You could lose money or deal with poor-quality home repairs
- It’s risky if you don’t know or trust the contractor
You could easily get scammed, as is the case when shady contractors travel to a disaster-stricken region and knock on homeowners’ doors (good contractors don’t need to do this)
Before signing your insurance claim to a contractor, be sure to research laws in your area. It could be a bad idea.