Home insurance. Should we have them repair our home, or settle for cash + find a contractor? (Ottawa)

Generally it’s better to let them fix it, because you really don’t know what might come up once you start repairs. Once you sign off on a settlement that’s it, there’s no going back to them for more.

If you’re confident you can find a reliable contractor to do it for less than their cash settlement, and you’re confident he’s not going to find hidden damage anywhere, you could potentially pocket any leftover money.

A family friend just went through this and said the cash offer they received most likely wouldn't have covered all the repairs needed.

They opted to go through insurance and if there was any changes or upgrades they wanted they could pay out of pocket

My suggestion would be to try and get a quote to see if that cash amount is close to the repair cost.

Check your insurance policy but usually when they repair it, they repair it at replacement cost (i.e. no deduction for depreciation) but if you find your own contractor using their cash offer, they will only give you actual cash value (i.e. deduct depreciation). Also insurance companies usually have a list of contractors they trust and can do the work properly. You do not want to mess with repairs when there's water damage and potential for mold.

Go through insurance. They will give you a discounted price ion repairs if you chose the cash option. Often you will find more damage once they start opening things up that insurance won’t cover once you paid out. Plus given all the damage done to their hikes, contractors will be busy and charging premiums. Insurance won’t account for that increase in pricing. Plus you need to sign off on work for contractors to get paid. If you pay cash, they will start a job and leave to start another one and finish’s yours later. Insurance 100%.

Alternate view here - it depends on what the insurable damage is, if it's something simple with low likelyhood of there being complications then going for cash might be the smart move. I had an insurance claim cover some window damage and took the cash, got more windows replaced than was covered because our contractor was significantly cheaper than the insurance contractor.

If it's for something complex like water damage, foundation issue, etc - 100% make them do it.

Pro of having repairs done by insurance company - work comes with a guarantee/warranty.

Con - they have preferred contractors they use/will generally always pick the lowest bidder which does not mean you’re getting the highest quality work done so it’s the luck of the draw.

Source - went through this after a house fire/complete rebuild. Preferred contractor selected was terrible and several things needed to be redone /fixed throughout the build and there’s still some things that are just done poorly/bad workmanship. If I had known then what I know now after going through 1.5 years of hell with this contractor I would have taken the cash settlement and hired my own PM/contractor to do the rebuild.

As someone else mentioned get independent quotes from trusted contractors to see if it’s worth it to take the cash settlement first.

My parents went through this and went with insurance using their contractors to repair everything. The repairs were guaranteed because a trusted contractor was used.

You bought home insurance to mitigate risk, correct?

If you accept the cash, it creates a risk that the repair costs more than the cash received.

Therefore, from a risk perspective, just let insurance fix your home for you.