Homeowners insurance payout question

[Craig D Peltier]

Do I have to use the payout money to rebuild a dog kennel that was destroyed. I have enough and don't need more. It's a 5 dog run so I'm not talking $500 it's more.I assume since I pay to insure an item and it gets destroyed (tree) I paid what they asked. So I can choose to rebuild smaller etc. They took a gamble insuring an so didn't I by insuring and paying them there requested monthly amount.I have dealt with homeowners insurance for floods and they send me a check an I hire out a contractor or I can use one they deal with .If I make money they dont care or know or ask. They don't ask for a bill or inspection.Thanks

[Mike Henderson]

No, you do not have to rebuild. The payment is for your loss, not for replacement. For example, let's say you get in an accident in your car and the other person is at fault. Your fender is dented but you can still safely drive the car. You will receive payment for the cost of fixing the fender but you do not have to get the fender fixed. Your car will be worth less because of the dent so you have suffered a loss, which you were paid for. Same is true for the dog kennel.

Mike

[Matt Meiser]

Maybe it's different because of the additional insured party (the bank) but when my truck was damaged this past winter in a parking lot incident, the check for the repairs was made out to both me and the collision center. I know our bank is named on our homeowners policy as well.

[Jim Rimmer]

Maybe it's different because of the additional insured party (the bank) but when my truck was damaged this past winter in a parking lot incident, the check for the repairs was made out to both me and the collision center. I know our bank is named on our homeowners policy as well.

That's the exception to what Mike said; if there is a lien holder then you have to make the repair to protect their investment. I assume the same would apply to the dog run but I can't imagine there being a lien holder on it. If you own the property or the vehicle outright, then the loss is paid to you and you can decide whether to repair or bank the money.

[Mike Wilkins]

Insurance companies cannot dictate what to do with the settlement. Been working in the claims environment for over 16 years, and there is nothing in the policy that dictates what the homeowner has to do with the settlement. Different story if there is a mortgage company involved, since they also have an interest in the property. As long as the settlement is fair for the type damages present, you are free to build whatever you want.

[charlie knighton]

insurance company sent renew bill, 25% higher, claim surcharge applied

i guess its time to go shopping

[Jim Koepke]

In my experience, any money from an insurance claim not used to rebuild the structure is liable to income tax.

Check with your tax accountant if you have one.

insurance company sent renew bill, 25% higher, claim surcharge applied

Our insurance company did not do this. I am very happy with them.

jtk

[Mike Henderson]

In my experience, any money from an insurance claim not used to rebuild the structure is liable to income tax.

Check with your tax accountant if you have one.

jtk

I'm pretty sure that's not true. Money from an insurance settlement is not income - it's just making you whole. If it were to be considered income, then the amount of the damage would be considered a loss so you net out even.

Maybe Mike W. will comment.

Mike

[Jim Koepke]

I'm pretty sure that's not true. Money from an insurance settlement is not income - it's just making you whole. If it were to be considered income, then the amount of the damage would be considered a loss so you net out even.

Maybe Mike W. will comment.

Mike

In my case, there was money paid to cover structure and labor. That which was not spent to replace structure was counted as payment for labor. So I was paid for my labor and taxed on it.

At least that is how I understand the situation.

I do know that some types of insurance payments are not taxable.

I do not know which are and which aren't.

That is why I suggest talking to someone who knows taxes.

jtk

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