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Can I build a patio rather than repair a deck with the insurance payout? My deck suffered pretty severe structural damage due to a fire and was built in 1991. Frankly, I don't like the upkeep of a deck. Can I use the insurance claim payout to build a patio? As a follow up assuming the answer is yes, the insurance company withheld part of the claim as recoverable depreciation. Can costs associated with building the patio be submitted and qualify to receive the withheld funds?

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Yes. As a general case, insurance proceeds are repaying you for the damage that you have already incurred, not specifically for fixing anything.

Since you have the legal right to sell the house as-is, without fixing it up at all, then you have the legal right to spend the insurance proceeds how you see fit. You can upgrade, downgrade, alter or replace your deck in any reasonable way... or do nothing.

You should call your agent and make sure that there is nothing unusual in your policy, but this kind of homeowner decision - what materials or methods to fix damage to a home... is very normal and unremarkable, so your agent will probably reassure you and end the conversation without a second's thought.

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Once you accept payment for an insurance claim, the insurance company has discharged its obligation to you. You could burn the money in a barrel and they would not care. There is no expectation or requirement that you repair or restore the insured item. You can do whatever you wish with the money.

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    Within reason - if there is a mortgage on the property, there are probably requirements in place that any damage likely to cause a reduction in value of the property needs to be rectified. In such a case, the insurer pays the money out, but the mortgage company would be the ones to say whether a replacement patio is acceptable. – Moo Oct 2 '17 at 0:33
  • In addition to the concerns @Moo notes, insurance providers will not be happy if you make a subsequent claim related to unrepaired damages that they paid for. For example, if you cash their check, but then leave a broken deck to rot, inviting termites to damage the rest of the house. Or a lawsuit when your neighbor's kid injures themselves on the broken structure, etc., etc... In short, you need to clean up the mess, but you should be able to replace it with a similar alternative structure as long as it's constructed properly and doesn't invite more claims later on. – CactusCake Oct 2 '17 at 15:53

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