What to do when the insurance settlement will not cover the repair

The settlement arrives, you take it to a contractor, and the number does not work. It is a common and demoralising moment, and the first thing to understand is that a gap does not mean anybody has behaved badly.

When we sit down and compare an insurer's estimate against our own quote, the difference is almost never the unit prices. It is that the two documents describe different amounts of work.

Compare the scope, line by line

Put the insurer's scope of loss next to the contractor's quote and read them together. The questions that find the gap are usually these.

• Does the estimate allow for removing drywall to the correct height, or does it assume a patch where the whole sheet has to come out?
• Does it include the work behind the finish: insulation, vapour barrier, electrical that got wet, subfloor?
• Does it account for matching? If a discontinued floor runs through three rooms, replacing one room leaves an obvious seam.
• Does it include the parts that are not repair but are required: permits, disposal, dust containment, protecting the rest of the house.
• Does it price by the actual room dimensions? Measurements taken quickly on a first visit are sometimes short.

Every one of those is a scope question, and a scope question has a fact-based answer. That is a far better conversation than telling an adjuster their number is too low.

Do not argue about the total. Find the line that is missing, and show why it has to be there.

Understand what the cheque actually is

Two things surprise homeowners regularly, and neither is a trick.

Depreciation and holdback

Many policies pay actual cash value first, meaning replacement cost minus depreciation, and release the rest once the work is actually done and invoiced. So the first cheque is often intentionally smaller than the full amount, and the balance is recoverable. Ask specifically whether your policy is replacement cost and how the holdback is released.

Betterment

The insurer owes you the repair, not an upgrade. If you are choosing better finishes than were there before, you pay the difference. This is fair, and it is also an opportunity, because doing the upgrade while the wall is already open costs a fraction of doing it later.

If the gap still does not close

Sometimes the disagreement is genuine and does not resolve over email. There are established routes, and using them is normal.

• Ask for a re-inspection with your contractor present. A great many disputes end here, because the two people who actually know construction are finally in the room together.
• Use the appraisal process. Ontario policies typically provide for it where the disagreement is about the amount of the loss rather than whether it is covered. Each side appoints an appraiser and they select an umpire.
• Escalate through the insurer's internal complaints process, then the General Insurance OmbudService for home claims. FSRA oversees insurer conduct in Ontario.
• Consider a licensed public adjuster for a large or complex claim. Verify the FSRA licence before you sign anything, and understand how they are paid.

Watch the clock while you do this. Policies contain timeframes for proof of loss, and Ontario has limitation periods for legal action. Being patient is fine; being unaware of a deadline is not.

What we can and cannot do

We are contractors. We do not negotiate on your behalf, we are not adjusters, and we will not tell you what your policy means, because that is not our job and we would be guessing.

What we can do is tell you accurately what the repair involves, quote it against the insurer's scope so the documents line up, put in writing why a line item is necessary, and stand in the room during a re-inspection and explain it. In our experience that is what actually moves these conversations, and it costs you nothing to have us come and look.