Need someone with Insurance Claim knowledge

[Denne]

We had a sewage back up and required assistance for clean up. When the cleaning up was going on, the clean up company manager was here he said not to worry about carpeting because they would get it for us at cost and save us some money. I already had an estimate for carpeting I liked, since the adjuster told me we would need to replace it all and I wanted to keep things going. Well...we were assured that we would save money with similar carpet through the clean up company. When we just got their billing it was the exact same figure as the adjuster had given us...of course no discount for the carpet being at cost and $2200 higher than my first estimate. I asked the the carpet invoice and have not been able to get it. Are we incorrect that we are able to keep any of the money that we saved in finding better pricing for the same carpeting as we had? My understanding is that we are being reimbursed for making repairs to make the property the same as it was. The Clean Up company appears to be making extra money from the carpet guy than what they pay him. They seem to be scamming either us or the insurance company to me....suggestions on proper handling of this matter.....other than being so stupidly trusting!

I know this is not a tax question really, but needed to check with smart people for help!!

Thanks!

[JohnH]

Do you have a check from the insurance company yet? If not, then this may play out a little differently than you are thinking. My daughter and her husband just had a reoof repalcement done due to hail damage. They have "full replacement" insurance. Here is how it went (figures are rounded):

1) They obtained a quote from a roofer for $7,000.

2) Adjuster evaluated the damage, agreed that the roof needed to be replaced due to hail damage, and approved the amount of the estimate.

3) Insurance company sent my daughter a check for $2,800 (which was the "depreciated value" of the roof) They were free to either keep the money and do nothing else, try to repair the roof, or continue with the full replacement. However, if they did not replace the roof, then any future claims would be reduced by the $2,800 already paid to them.

4) They gave the roofer the adjuster's report and paid the $2,800 to the roofer, who then replaced the roof with the agreement that the roofer would accept the remaining payment from the insurance company.

5) When the roof was replaced, my daughter signed off on the roofer's invoice and sent it to the insurance company. The insurance company will pay the remaining $4,200 to the roofer, not to my daughter.

Apparently, this provision has always been in insurance policies, but insurance companies often just wrote the full check to the homeowners and forgot about it. But with their profits being depressed by claims and lower investment earnings in recent years, plus an increase in fraud & dubious claims, insurance companies are adhering closer to the strict terms of their policies now.

This is based on a single experience, and others may be able to shed more light on your specific situation. However, I didn't understand how this all worked at first and I had to do some research to figure out what was happening as this process unfoled. In retrospect, it makes perfect sense.