Properties get damaged, whether that is from a fire, a burst pipe or the good ol’ British weather. When damage occurs many homeowners turn to their building’s insurance policy to put it right. But when you’ve navigated the complexities of your policy and your claim has been approved, you may be faced with a choice – have your property reinstated or take a cash settlement?
But what is the difference?
Cash Settlement Vs Reinstatement
The main difference between a cash settlement and reinstatement is that a cash settlement provides the policyholder with a cash lump sum. Whereas reinstatement pays for the works carried out to return the property to its pre-loss condition.
What is a cash settlement?
A cash settlement is a lump sum payment equivalent to the estimated cost of repairs, paid by your insurance company, less your excess, following the approval of your claim.
If you decide to take a cash settlement the responsibility of fixing the property falls to you, the policyholder. However, the settlement value will likely be based on reinstatement rates produced by the insurer. Rates which may often be lower than the average contractor. Meaning the lump sum may not always cover the full cost of the repair works to your property.
Unforeseen damages may not always be apparent during first inspection of your property. Often, it is only when reinstatement works begin that further damage may be found. Once a cash settlement has taken place, the claim is considered complete by the insurer, therefore, you will be unable to return to the insurer to request further settlement for any hidden damages caused by the initial incident.
It is worth noting that should you take a cash settlement and be unable to fully reinstate your property, any further damage caused by the incomplete works will not be covered by your insurance policy.
What happens if I choose to reinstate my property?
Opting for reinstatement involves having the insurance company coordinate the repairs to your property, putting it back to its pre-loss condition.
Having the reinstatement works completed as part of your claim offers you extra protection if anything goes wrong. Should there be a problem with the workmanship, you are able to speak with your insurer to rectify the issue.
Following this, should the issue not be resolved to your satisfaction, you also have the option to go the Financial Ombudsman Service, an independent body that settles any dispute between a consumer and a financial services company.
Reinstatement professionals have the experience and resources needed to ensure that all damages are identified, repaired, and restored to their pre-loss condition. This minimises the risk of future issues and helps to preserve the property’s market value.
Aspray Loss Assessor: Help is on Hand
Insurance claims can be complex. Add in elements of damage assessment, building regulations and contractor management and dealing with an insurance claim can become a colossal task.
But help is available.
Instructing a loss assessor such as Aspray means you can leave the management of the entire claim to an expert. Our assessors can assess the damage, communicate, and negotiate directly with your insurer or their representative, manage contractors and oversee all reinstatement works.
The Aspray loss assessing service is free to you, the policyholder, providing we complete the reinstatement works using our vetted subcontractors. If you are a VAT registered company or individual, please be aware you are responsible for paying the VAT of the settlement, however, you can claim this from HMRC on your next return.
Need to make an insurance claim for damage to your property? Contact Aspray