Tenant Fire & Insurance - How does payment get handled?

[Matt Said]

My tenant somehow started a kitchen fire that was pretty isolated but smoke damage spread through-out most of the unit.  No structural damage other than fire dept ripped down some cabinets and punched through the drywall in a few places.  

Insurance company is saying roughly $28k in damages and has a preferred vendor which would do the work & direct bill.  Has anyone gone through this before?  I'm trying to stay within what is legal but if I hire my own contractors, get a check from the ins company and don't pay out the full $28k, can I pocket the rest?   Or does it not work that way?   Thanks!

[John Mocker]

Matt,
Generally the company will pay you the loss minus depreciation. Then when you show the receipts for the work that was done they will pay the difference. Check with your company but you should be able to use your own contractors. If they are less, I don't think you can pocket the difference.

[Jason White]

@Matt Said

Please find a good local fire restoration contractor that is NOT a preferred vendor, they (preferred contractor) are not on your side in this, their meal ticket is the insurance company so they like to keep them happy not you. $28k for a full kitchen and clean and paint is low. You are the one hiring the contractor whether it’s a preferred contractor or an independent fire restoration contractor that you find. The insurance company has no right or responsibility to repair your property, they just pay for damages.

The local restoration contractor will give you a scope of work and work with the insurance company to get everything that is damaged by the fire including smoke smell and any potential water damage above and below the fire covered. If you have any questions feel free to ask me or @Jeremy VanDelinder we both own fire damage restoration companies and deal with this every day.

[Jeremy VanDelinder]

Sorry, I'm a little late to this post. @Jason White gave you some good advice. The insurance company pays for the damage minus the depreciation: that is called the ACV (Actual Cash Value). If you have replacement coverage, once the work is completed they will pay an additional check for the depreciation--that is called the RCV (Replacement Cost Value).

When you say "roughly $28k" is that you using the word "roughly" or is that the insurance company? Because I wouldn't settle for any insurance company telling me "roughly" ANYTHING. If they are throwing around rough numbers and recommending their vendor, this is not headed in a good direction. If you aren't getting a fair shake from them, a Public Adjuster is always an option (the insurance company may hate you for it, but if the PA is good he will get you paid). 

Can you save money from the insurance and pocket the rest??--likely (depending on a couple factors) HOWEVER, I don't that that its advisable. You can always get "Two Dudes with a Hammer" to do it cheaper, but fire damage, smoke damage, water (potentially mold) and odor mitigation is things you really want a professional working on. You will spend a long time regretting doing otherwise if the less expensive option doesn't get it right. Obviously, I'm hundreds of miles away--I have nothing to gain by telling you that--I just know how many ways there are for someone who isn't a fire restoration professional to screw it up. You want your goal to be 1) make sure the place gets fixed up right and 2) make sure the insurance company pays for it. Your goal should not to be make money off this.

Hope that helps. Let us know what other things we can help with. I know that @Jason White and I are glad to advise in whatever way we can.