If your homeowner’s insurer paid out for a legitimate claim to your property, must you do the work?

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If your homeowner’s insurer paid out for a legitimate claim to your property, must you do the work?

My mother had damage to her home from mold due to poor drainage. She contacted her insurance company and hired an estimator. She was awarded money based on the claim determined between the estimator and the insurance company. She is now in the process of short selling the house in “as is” condition. And the potential buyers plan on doing a complete rehab to the area of the house. This being the case my mother has decided not to proceed with the work. The estimator who was going to contract out the work is threatening her that she is committing insurance fraud. Is this the case?

Asked on May 14, 2012 under Insurance Law, New Jersey

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Under the law of all states in this country, if one's insurance carrier (or a third party's insurance carrier) pays out on a damage claim, the person receiving the check is not obligated to make the repairs that the settlement check is predicated upon. In your mother's situation, she can do whatever she wants with the check she received from her insurance carrier and that would be within the law.


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