Can I partially repair what home insurance paid for?

Question

My home has water damage from a faulty gutter, that basically created a waterfall that splashed on one particular part of the stucco. The water eventually bubbled the exterior paint in that particular spot, and came through the stucco, and block. This was caused by the roofers using my gutters as footholds, and they bent them in places. I originally brought this to the roofer's attention, and he had a gutter company check them. They said they were fine, I moved on since it wasn't that noticeable, and was happy with a new roof. That was in February.

Fast forward to rainy season in Florida, and I noticed a small section of baseboard discolored in my living room, which I hardly go in. The discoloring got worse, and I noticed my laminate floor was slightly warped. One day it's raining and I happen to look out the window, and saw a waterfall. I went outside and saw where the water was splashing over the bent gutter, onto my house.

I called the claims company that handled the roof, and they told me too bad, make another claim. I did that, and I was sent a low five figure check. In the adjusters report he put the entire 1,300 square feet of laminate was to be replaced (because it's one huge flowing floor, with no breaks), of course with the damaged baseboards, stucco, paint, etc... Nothing about the gutters which caused the problem.

I put the floor in myself less than 10 years ago. In my opinion there is only a few rows of boards that will need to be replaced in that room only. I was planning on using that money to have a pro fix the stucco, paint the house, replace any damaged drywall. I was going to fix the interior myself, and use saved money for the gutters.

My Mortgage company wants me to fix the house specifically to the adjuster's report. I see no need to rip up over 1,000 square feet of perfectly good floor. Then if there's no money left, I have to replace the gutters out of pocket.

I just mailed the check to the mortgage company. They are going to endorse it, and send it back for me to deposit, and have repairs made. They said that I needed to do what's on the report, and it will be inspected by them after.

Can I fix the portion of the floor and baseboard that's damaged, and leave the rest which is in very good to excellent condition?

Answer 1

Yes, if your mortgage documents are similar to those quoted in https://money.stackexchange.com/questions/71637#71643, you can perform the repair you describe. Basically, if a homebuyer (or their diligent home inspector or the bank's representative) cannot tell the difference between the as-repaired floor-and-baseboard and a floor-and-baseboard that had only suffered normal wear-and-tear, you will have repaired the floor-and-baseboard sufficiently. Such mortgage documents also give you the option to use the repair money to pay down the mortgage principal instead of fixing the floor.

Whatever you choose to do, be honest.

Answer 2

The short answer is: the money is yours from the insurance company, they actually can't tell you how to spend it, they can only decide from their tables and your plan, how much you get.

The longer answer: Usually the insurance company pays one blanket amount, then itemizes the rest, where you have to submit receipts. You're also lucky, because damage over time is rarely covered, damage is usually only covered as sudden damage, so they don't pay out for maintenance issues.

You can repair your house the way you want, I even do some of my own labor, because some repair jobs just don't get covered what they really cost to do right.

HOWEVER, your mortgage company can withhold part of your claim to verify satisfactory work, this is to maintain the value of the collateral, and the insurance company can choose not to cover pre existing damage. Generally they don't stray from the assessment.

I do not know of any law that permits an internal inspection of your home without your consent. They can come look at the outside, but they can't force you to let them inspect inside... Unless they're holding some of your insurance payment hostage, for most banks, receipts are sufficient.

A good contractor usually will meet all the needs with an itemized budget and has a bit of wiggle room to fix things the right way, while keeping the bank and mortgage company happy.