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QUESTION: What if I did not use my insurance claim check to replace my roof?


ANSWER: Well, looking at this logically, if the weather, termites or some other insured peril has caused serious damage to your roof, why would you use the money for something else? If you want to live in the house, you do the repairs, otherwise water pouring in from the skies brings down the ceilings and damages all the contents.

However, let's take a different view. Suppose there's serious damage and, without waiting for the insurer, you pay for the repairs using your own cash or funds drawn from your credit card. Now, when the check finally comes in from the insurance company, you want to pay it into your bank account and use it as part of your general funds. The answer is: that's OK. You don't have to wait for the insurer to pay you the money to repair the roof and, when it arrives, you can use the money for anything.

A second possibility is that once you have banked the check and the builder gets up on the roof, he discovers the damage is not quite as serious as previously thought. He's not going to charge you as much. So, while you have the builder in your home, you ask him to do one or two other smaller jobs that have been put off for years. This is more or less OK. The money is still being used for the repair of your home. So long as the original claim was honestly made, the insurance company will not be too upset if a small portion of the check is used for other things.

But the insurer is going to be upset if you make a claim for repairs knowing you are actually going to abandon your home. Suppose there's serious damage and it's going to take a while to rebuild the roof. You decide to sell the site as it is and buy another home. Well, the claim for roof repairs is a form of fraud. You dishonestly tell the insurer you want the money for a particular purpose whereas you actually want to use the money as part payment on your new home.


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