Public Adjusters & Insurance Appraisers

Should You Accept Early Insurance Payments

Accepting Early Insurance Payments After a Loss: Understanding Your Rights and Options

Should You Accept Early Insurance Payments?

Expe­ri­enc­ing a fire loss is an emo­tion­al­ly and finan­cial­ly drain­ing ordeal. The after­math can often feel like a maze of insur­ance claims, tem­po­rary liv­ing arrange­ments, and the daunt­ing task of rebuild­ing. Amid this chaos, receiv­ing an ear­ly insur­ance pay­ment, like an advance, can pro­vide imme­di­ate finan­cial relief. How­ev­er, many home­own­ers are hes­i­tant to accept these ini­tial funds, fear­ing it might com­pro­mise their abil­i­ty to secure a fair set­tle­ment lat­er. Let’s dis­pel this myth and pro­vide clar­i­ty on why it’s okay—and often advisable—to accept and deposit these ear­ly pay­ments from your insur­ance com­pa­ny.

Early Insurance Payments: What Are They?

Fol­low­ing a fire loss, insur­ance com­pa­nies often pro­vide home­own­ers with an advance against their total claim set­tle­ment. This is not a final pay­ment but rather an imme­di­ate relief fund to cov­er urgent needs such as tem­po­rary hous­ing, cloth­ing, and food. It’s impor­tant to under­stand that this is part of your right­ful cov­er­age and is designed to help you through the ini­tial recov­ery phase. Let me also add that the ini­tial check an adjuster might give you at your first meet­ing is typ­i­cal­ly going to be between $,1000-$5,000. If they don’t offer you a check to help with your unan­tic­i­pat­ed expens­es at your first meet­ing, ask them for one. 95% of the peo­ple I meet get some mon­ey with­in days after they have expe­ri­enced a loss. Don’t think that the adjuster assigned to your claim is doing you a favor. They’re not. An advance is cus­tom­ary, not rare.

Why You Should Accept Early Payments

Imme­di­ate Finan­cial Relief: The pri­ma­ry rea­son to accept these funds is to alle­vi­ate imme­di­ate finan­cial pres­sures. Fire loss­es can dis­rupt your life sig­nif­i­cant­ly, and hav­ing access to cash can help you man­age day-to-day expens­es dur­ing this tur­bu­lent time.
No Strings Attached: These advances are exact­ly that—advances on your even­tu­al claim set­tle­ment. They are not final pay­ments and accept­ing them does not pre­vent you from fur­ther­ing your claim or receiv­ing a high­er set­tle­ment in the future.
It’s Your Mon­ey: Remem­ber, you’ve paid pre­mi­ums for your insur­ance cov­er­age, and this pay­ment is part of the pro­tec­tion you’ve invest­ed in. Uti­liz­ing these funds does not grant the insur­ance com­pa­ny any addi­tion­al rights or lever­age over your claim.
Any advance giv­en to you with­in days of your loss is not “free” mon­ey. The adjuster ear­marks that mon­ey usu­al­ly to the Per­son­al Prop­er­ty part of your claim. As you spend that mon­ey on food, deposits for hous­ing, rental of fur­ni­ture etc… you should get receipts show­ing the pur­pose for those type of expen­di­tures. As you send those receipts for Addi­tion­al Liv­ing Expens­es (“ALE”) into the adjuster (send them the orig­i­nal and make a copy for your­self) they will then cred­it the Per­son­al Prop­er­ty of your claim for those expens­es while simul­ta­ne­ous­ly charg­ing them back to your ALE cov­er­age.

How to Manage Early Payments

Doc­u­ment Every­thing: When accept­ing any pay­ment, ensure you receive and keep detailed doc­u­men­ta­tion from the insur­ance com­pa­ny. This should spec­i­fy that the pay­ment is an advance and not a full and final set­tle­ment.
Com­mu­ni­cate Clear­ly: Main­tain open com­mu­ni­ca­tion with your insur­ance adjuster. Make it clear, and in writ­ing, that you under­stand this is an advance and that you reserve the right to con­tin­ue your claim process for addi­tion­al dam­ages or loss­es dis­cov­ered lat­er.
Keep Records: Use the funds for nec­es­sary expens­es relat­ed to your loss and keep metic­u­lous records of how you spend the mon­ey. This trans­paren­cy can be ben­e­fi­cial if there are ques­tions about your expens­es relat­ed to the claim. I always rec­om­mend to clients to keep a big enve­lope in which to keep all rel­e­vant receipts and a binder for all sorts of doc­u­ments if you are not dig­i­tal­ly inclined.
Con­sult a Pro­fes­sion­al: If you’re unsure about the process or how accept­ing an advance affects your claim, con­sult with a pro­fes­sion­al. A Pub­lic Adjuster spe­cial­iz­ing in insur­ance claims can offer valu­able guid­ance.
Pay­ments Asso­ci­at­ed with Ini­tial Struc­tur­al Esti­mate: Even if the insured dis­agrees with what has been offered and plans to fight for the mon­ey they feel they are right­ful­ly due, accept­ing the mon­ey based on the first writ­ten esti­mate does not stop you, the insured, from con­tin­u­ing the fight down the road. It is ok to accept these monies and deposit them in your bank account. The only thing an insured should be wary of in this regard is sign­ing what is called a “full and final release”. This doc­u­ment would pre­vent you from fur­ther­ing their claim.

Final Thoughts

In the after­math of a fire, it’s essen­tial to focus on recov­ery and rebuild­ing. Accept­ing ear­ly pay­ment from your insur­ance com­pa­ny is a legit­i­mate, safe step towards that goal, pro­vid­ing you with nec­es­sary finan­cial sup­port with­out com­pro­mis­ing your rights. Remem­ber, you are not alone in this process, and there are resources and pro­fes­sion­al pub­lic adjusters who can help you nav­i­gate this chal­leng­ing time. Accept the help you’re enti­tled to and focus on mov­ing for­ward, one step at a time.

If you have any ques­tions about any of the above, I can be reached at conor@franklinpropertyclaims.com.

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