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Remodel Planning after a Homeowners Insurance Settlement

After Dealing with Your Insurance Company, Make your Settlement Money Work Harder Following a Fire, Hurricane, or Flood

© 2011 by all rights reserved; content may not be copied, rewritten, or republished without author’s written permission.

A cedar picket fence offers residential privacy, photo courtesy Kelly R. Smith
A cedar picket fence offers residential privacy, photo courtesy Kelly R. Smith

This article was updated on 09/08/20.

So, you've got a settlement from either your standard homeowners insurance policy or a supplemental for flood, etc. If you’re a hard-core DIY type, the information presented in this article will most likely be completely obvious, but many homeowners aren’t wired that way.

The fundamental concept, after you have received your check, is to search out ways to stretch your construction budget. It is no secret that the basic job of insurance adjusters (despite what radio and TV commercials say) is pay out the minimum amount of money.

Because of this, every allocation detail has be examined closely. Start with the necessities before moving on to the luxuries. Function trumps fashion every time. Want you want isn't necessarily what you need.

Avoid Contractors when You Can

If you don’t have any knowledge of the construction industry, you may not realize that labor costs can be equal to the material costs. This is especially true if you are hiring union tradesmen.

Other than that situation, it’s not greed. Things like various types of insurance, bonding, transportation, tools, time lost to rain-outs, advertising, etc. all add up.

So it is obvious to do as much of the work as you can handle. This is one of the best ways to get more bang for your buck. That said, you will still need to pick a specialized building contractor whenever the local building code calls for it.

As one example, most electrical building codes stipulate using a licensed electrician for many jobs. Perhaps the same for your plumber. In some states wood framing requires a permit. Know what your local building code calls for.

I’ll give you a personal example of saving money: one afternoon I pulled up in front of my house and what did I see? Water streaming from under my entry door and garage door. It was truly an “oh no” moment.

As it turned out, a bathroom sink hot water supply line had a blowout. I have no idea how long it had been running. My State Farm homeowners insurance policy settlement went much further as I took it upon myself to remove the carpet and replace it with laminate flooring which was easy with a few inexpensive laminate flooring tools.

Save Money by Registering a DBA to Secure Contractor Discounts

What is a DBA? It is a “Doing Business As” document; what it boils down to is registering and locking in a business name with your county or your city. This is a very easy procedure if your municipality allows it. Always check the rules in your area.

This will establish you as a contractor, and you will need it to open a bank account for your company name if you, like many, don’t feel comfortable carrying a lot of cash around. Having a registered company has many benefits.

It will entitle you to building contractor discounts at many building material vendors. It will also get you in the door to vendors that only sell to contractors at deep discounts. For example, my company name is Reliable Construction.

Is doing this legal and/or ethical? Yes! Of course, there may be locations where the rules are a bit different, but I havn’t heard of them. Obviously, check how this works in your area. Any person with basic skills can be a pro painter, carpet installer, or window treatment installer.

In fact, there is no reason you can’t start a sideline business to earn some extra cash in the current economic recession that began with the COVID-19 pandemic. But it is not a good idea to hang your shingle out as a plumber or electrician unless you really are; usually this requires licensing.

A Good Strategy is Negotiation With a Contractor

After the last hurricane, my neighbor and myself needed to join forces (and funds) to repair the fence between our properties. I could have rebuilt it myself but I had too many other projects lined up.

We secured a bid from another neighbor, who is a handyman. It was acceptable once we negotiated. This was a financial case of the labor cost equaling material cost.

But as it turned out, there was a fly in the ointment. His business model is adding approximately 30% to the material price for transportation to the job site. Well, the local Home Depot store is only 5 miles away. Also, I was driving, at the time, the largest Toyota Tundra they make.

With that in mind, we negotiated let him have his labor piece of the pie, but my neighbor and myself bought and delivered all the cement, fence posts, and pickets.

So in summary, these are three simple methods to stretch your renovation dollars. Doing some of the work yourself makes sense, and even if you have to purchase some basic tools, you will still be money ahead. Larger tools can always be rented. Anyone can paint a wall, rip out carpet and padding, and other basic tasks. The important thing is that remodel planning after an insurance settlement is key.

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About the Author:

Photo of Kelly R. Smith and Frankie, Southern Black Mouth CurKelly R. Smith was a commercial carpenter for 20 years before returning to night school at the University of Houston where he earned a Bachelor’s Degree in Computer Science. After working at NASA for a few years, he went on to develop software for the transportation and financial and energy trading industries. He has been writing, in one capacity or another, since he could hold a pencil. As a freelance writer now, he specializes in producing articles and blog content for a variety of clients. His personal blog is at I Can Fix Up My Home Blog where he muses on many different topics.

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