So what's wrong with making an insurance claim?

[97guns]

I've been hanging out on another investing forum and told my story about a pipe bursting in one of my rentals, had to cut open the concrete sub floor, repair drywall, flooring and replace bathroom vanity. I put a claim in and got a check for 14k, then I shopped for the best price, just so happened to be a friend of my old manager who did the job for just under 10k, I ended up pocketing $3k after the deductible and guys start jumping me saying "so that's why our insurance rates are going high" and "Another good way is to take from the Sunday offering plate"

Did I do wrong, I really don't think so, what you say???

[~bs]

there's nothing wrong with that. If they pay you out directly for the amount determined by a fair, 3rd party appraiser as to what the repair cost would be, their hands are washed clean of future liability relating to the occurrence. If you choose to repair the damage your self or just leave it alone, and the property vacant, that's also your choice. If you cut costs, and that cost cutting results in the same damage occurring again or additional damages occurring(say the same pipe bursting again), they may deny that future claim because you didn't adequately address the repair with the original insurance payment.

It's like if someone hits your car, you file claim, then choose to just pop out the dent and spray primer over the damage and pocket the money. It's your choice.

IF on the other hand, they make the check out to the repair guy who performed the appraisal, then yes the full amount will need to be applied to the repair.

[disneysteve]

I agree. There's nothing wrong with that at all. You didn't do anything to defraud the insurance company.

Now if your repair guy gave the insurance company an estimate of $14,000 and then only actually charged you $10,000, that would be illegal.

A lot of insurance estimates get padded in order to cover the deductible. For example, a $5,000 auto repair with a $500 deductible will get written up as a $5,500 job. The company knocks off $500 and pays the shop $5,000 and the customer pays nothing. That is insurance fraud and is illegal, though it happens every single day.

[~bs]

^

Or if you're in cahoots with the insurance guy, he's estimating high in exchange for pocketing some cash or he's not 3rd party. You can get in trouble with insurance fraud, and the companies have much deeper pockets and attorneys on retainer than you do. So don't do it.

The tidbit you mentioned is also one reason why they could require multiple quotes or require you to select from a list of approved shops. much harder to game the system.

[Thrif-t]

I don't see anything wrong with it. I did the exact scenerio mentioned above, got paid out for an auto claim and pocketed the money and drove around with a bashed in door. Of course I was in college and that claim money paid my next semester of classes

[msomnipotent]

I don't see anything wrong with it. I did the exact scenerio mentioned above, got paid out for an auto claim and pocketed the money and drove around with a bashed in door. Of course I was in college and that claim money paid my next semester of classes

Me too, but the guy that hit me lived in the same subdivision and got pretty mad when he realized I didn't bother to get the car fixed. It was old and I planned on selling it before he hit me, and it is none of his business what I do with my money.

[phantom]

I've also taken auto insurance money and skipped getting the repair. I'd had my car for less than a month, when a bus decided to try to squeeze past me and failed. It put some deep gashes in the plastic that held my mirror. I got paid the few hundred dollars that it would take to fix the mirror and decided I'd rather have a few hundred dollars than a gash-free mirror. It seemed fair considering that my car had been devalued by the gashes.

I figure the money you get for damages should cover the fair market cost of restoring your property to its previous state with minimal effort. If you choose not to restore it to the previous state, or if you choose to spend time and/or social capital getting a better deal, there's no reason you shouldn't get to keep the money. The fact that you got the money as compensation for damages rather than earning it in some unrelated mannner doesn't mean you can't be smart with it.

[AJ444]

It sounds like the folks on the other board have a problem with the system and are taking it out on you.

I also have a problem with the system but don't fault you at all for legally taking advantage of it. I would as well in that scenario.

[Milly]

I wouldn't have thought of it. I would have shopped for the lowest price, then send the quote out.

I think I would have felt dishonest intentionally shopping for a high quote, but perfectly honest if I found a better deal after the fact. I definitely wouldn't have contacted the insurance company to see if I needed to pay them back. It sounds like what you did is somewhere in between, so it just depends on if you feel it was honest.

[97guns]

The insurance company either writes their own bid or uses their 3rd party, policy holders don't submit bids anymore, at least in my state and my last 4 claims

[disneysteve]

I wouldn't have thought of it. I would have shopped for the lowest price, then send the quote out.

I think I would have felt dishonest intentionally shopping for a high quote

OP can correct me if I'm wrong but I don't think that's what happened. Typically the insurance company sends out an adjuster. They survey the damage and come up with the repair cost and that's what the policy pays out.

[LivingAlmostLarge]

Usually I take it to a shop and they pay directly that's how it's usually worked. I might have done the same if they ever cut me a check but that's not how my insurance company has handled it. I guess it's a state thing?

[~bs]

The insurance company either writes their own bid or uses their 3rd party, policy holders don't submit bids anymore, at least in my state and my last 4 claims

probably depends on the insurance company and the state.

as far as I'm aware, you can still choose your own shop in my state. I think there may be a dollar threshold though because I've known of insurance companies that pay the chosen repair shop directly as well.

So yeah, you could probably shop around for the highest rate, and choose to submit that, but idk, that's a bit much for me personally.