Know what to expect from your insurance company

After the claim is filed, know how you will be paid

Published On: Feb 13 2012 02:02:03 PM EST   Updated On: Feb 13 2012 02:27:47 PM EST

The first check you get from your insurance company is often an advance, not a final payment.

If you're offered an on-the-spot settlement, you can accept the check right away. Later on, if you find other damage, you can "reopen" the claim and file for an additional amount. Most policies require claims to be filed within one year from the date of disaster.

When both the structure of your home and your personal belongings are damaged, you generally get two separate checks from your insurance company. You should also receive a separate check for additional living expenses.

  1. Rebuild your home on the same site.
  2. Sell the land your old home was built on and build in a different place.
  3. Rent a home rather than rebuild the one that was destroyed.

If you decide not to rebuild, the settlement amount depends on state law, what the courts have said about this matter and the kind of policy you have. Read your policy carefully if you decide not to rebuild and find out from your insurance agent or company representative what the settlement amount will be based on.

A similar rule applies to repairs. Suppose you decide to change the kitchen flooring materials when you rebuild. If you replace your expensive floor with materials that are cheaper but more practical, you are not entitled to the difference in cash. Unless the cost of repairs is a small amount, your insurance company may initially pay you a sum equal to the actual cash value. It will withhold the balance of the full replacement cost amount until after the repairs are completed.

Insurance companies may not sell policies as hurricanes near land.