Consolidating items on an insurance estimate towards an upgraded roof



I recently began working for an insurance restoration contractor and am curious about something we’ve heard a lot of contractors doing, but are unsure whether it is fraudulent or not. So if a homeowner receives an estimate from an insurance company written with Xactimate - say a full roof approval with R&R 2 downspouts and R&R 3 window screens - is the contractor able to say to the homeowner, “Ok guys, so you were approved for a full roof replacement, along with 2 downspouts and 3 window screens; what we would recommend doing in this situation is consolidating the money insurance is paying for the downspouts and window screens and putting that money towards upgrading your roofing system (adding deck armor for example)”.

Is that defrauding the insured or the insurer? I guess the question in essence is, is the homeowner allowed to allocate the funds of an insurance estimate to what they deem most useful? It seems that the insurer wouldn’t be responsible for paying for something that does not end up getting replaced, but we hear nearly every contractor in our area doing this.

Any insight is much appreciated.


I think they can but later on if they need to make another claim and it had to do with items that were supposed to have been replaced in a previous claim then insurance would not pay to have them replaced again.

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The homeowner can absolutely put the money wherever they want to. Whatever work is not performed per the report will likely not be paid for on a later claim. But don’t tell the insurance co you did the work if you didn’t. That would be fraud.

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The homeowner may spend the ACV money on whatever they want to. However, if there is depreciation on items where the work is not done and an invoice is filled to recover that depreciation, technically it is fraud. Well it ever be prosecuted? Not likely.