Your Rights as an Insurance Customer

It is a common misconception among people who are filing claims against their homeowners insurance that one must choose the contractor who submits the lowest price. In fact, this is not usually the case. You have the option as a homeowner to hire whoever you want, to repair your home, and most insurance companies will pay the full amount (minus the deductible of course).

If a contractor indicates that they "work for the insurance company" then that statement is almost certainly false. Many insurance agents, in order to avoid any possible appearance of impropriety, will even avoid endorsing a particular contractor at all. If a contractor or an insurance agent tried to pressure you into using a particular contractor, that would probably be against state insurance regulations. In short, you have the right to have repairs done on your home by any contractor you choose to hire, and your insurance company must pay for covered repairs no matter who does them, as long as the cost falls reasonably within local industry standards.

It is in your best interest to always hire a reputable contractor who is both licensed and insured to work on your house. Hiring a licensed contractor is especially in your interest when the work will be repairs that are covered by insurance. A licensed contractor is required by law in Tennessee to warrant his work and materials for at least one year from the date of purchase, and in the case of a major structural defect Tennessee contractors must stand behind their work for at least five years. If you hire someone who is not a licensed contractor then technically you become the "prime contractor".

What this means is that you are legally liable for the warranty even if you sell your home. Because of this, some insurance companies may require you to use a licensed contractor, especially for structural repairs. Another issue with "acting as your own contractor" is insurance for the duration of the job. Reputable contractors always carry insurance which protects themselves and their customers against liability which may be incurred by many things such as an injury to a worker, or even wind damage to property while the job is in progress.

When you act as your own contractor these liabilities would be incurred by you or at best by your homeowners insurance. When you hire a licensed and insured contractor, you are completely protected from these kinds of liabilities. An unlicensed contractor or repairman may appear to be a bargain at first but when you consider the possibility of exposure to very large personal liability for injury or a structural defect it just doesn't make sense.