new roof with insurance claim

Question

i got my roof redone recently and insurance paid 22k and it only cost 18k to replace .my name was on check with the roofing company ,so i signed it and gave the check to the roofing company. i have not received a dime of what was over paid by insurance. it has been 3 weeks since i gave them the checks. i have tried contacting them and was told i won't be getting any of what was left .what should i do? do they have any rights to that money?

Answer 1

It's not entirely clear whether the extra $4K belongs to you, or your insurance company. One thing is pretty clear though: the $4K does not belong to the roofing contractor. The contractor, having given you an invoice for $18K and receiving a check for $22K knows this without a doubt, and IMHO this constitutes nothing less than an attempt to steal from you.

Is there any scenario where the roofing contractor should be allowed to keep the $4K? There are some contrived scenarios, but based on your description I don't think either of these happened:

1. If the original estimate from the insurance company was $18K, and the roofing company told them it's going to cost $22K instead, and then the insurance increased the estimate to $22K, then the full $22K would belong to the roofing company. But if this is what happened, then the quote they gave you would have said $22K, instead of $18K.
2. If while repairing the roof for the agreed upon $18K, the contractor found additional work to be done, they repaired it, and increased their price to be $22K, and you agreed to it, then they would be entitled to the full amount.

Based on your description, it sounds like had you written them a check for $18K they would have happily accepted it. All signs point to them trying to take advantage of you simply because you let them deposit the check.

What should have happened: In retrospect, the roofing contractor should not have been the one depositing the check. They should have endorsed it and you should have deposited it, and then when the check cleared you would pay out the contractor. (I had a recent claim where my checks also contained the name of my mortgage company, so I mailed them the check, they signed and mailed it back to me.) Obviously that doesn't help you know though...but let's let this be a lesson for future readers.

Who does the $4K belong to? With my claim last year I specifically asked my insurance company (StateFarm) what would happen if my repairs are less than the estimate, and/or if I decided to do some of the work myself. The answer I received was that I get to keep the difference, and I did. I don't want to say with certainty that you would get to keep the difference in your case also, but given my experience with one company and one claim, it's definitely possible.

What can you do? I recommend two things, but I won't specify which order to do them in:

• Contact your insurance company and ask them the same question I did: "What happens if it costs less to repair the damage than the amount of the estimate, or if I did some of the work myself? Do I keep the difference?" If the answer is yes, then I would explain your situation and ask them what they recommend you do for retrieving the rest of the money from the roofing contractor.
• Contact the roofing contractor again. Remind them that the cost of the work was $18K, and you let them deposit the check, and they owe you difference. You can ask them why they are now charging you $22K now when you agreed upon $18K? Next you can word this however you'd like depending on how the conversation is going, but basically you need to imply that you're willing to involve the insurance company, or an attorney, or even the police. The contractor knows they are wronging you, and my gut feeling is they will cave pretty quickly as soon as you put up a fight.

Additional thought: It's possible that by involving the insurance company, if you're not entitled to keep the money, your actions would accomplish nothing more than the excess money getting returned to the insurance company. But even if you know that's what will happen, I would absolutely still do it! Out of spite, I wouldn't want the contractor to get away with this, but more importantly, your future insurance rates are partially based on how large your claims are. A smaller total payout could lessen how much your premium increases in the future.