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Thread: Using insurance money for something else?

  1. #1
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    Default Using insurance money for something else?

    Hypothetically speaking, say a person makes an insurance claim for a something in her house but uses that money for the house taxes. And say she does it with her siblings, can they get in big trouble for something like that?
    Thank you



  2. #2
    Senior Member Level 8 Mark Rosenthal's Avatar
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    It all depends on many issues.

    Is the home Paid Off or does it still have a mortgage?
    Mark Rosenthal
    I have not been on this forum in years and it wont allow me to delete my outdated old post. If you want to contact me, you can find me on Linkedin at https://www.linkedin.com/in/connectwithmarkrosenthal/

  3. #3
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    Quote Originally Posted by Mark Rosenthal View Post
    It all depends on many issues.

    Is the home Paid Off or does it still have a mortgage?
    The house is paid off. It was inherited by the children, hypothetically speaking.

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    The insurance company will issue a check based on the actual cash value. Actual cash value is the cost to replace with deduction for depreciation and is determined by the insurance company. If it costs several thousand dollars to replace the damaged or stolen personal property the insurance company's determination of the actual cash value may amount to a few hundred dollars. If the insurance policy includes replacement cost personal property the insurance company issues another check for the difference between the actual cash value and the actual cost to replace. The additional loss settlement check rquires proof of purchase of new items that replaces the damaged or stolen personal property.
    Therefore, the insurance company does not care what you do with check for the actual cash value. However, the insurance company is required to settle claims promptly and if the policy includes replacement cost coverage, the insurance company will be following up for proof of purchase of the replacement items. Failure to provide the requested information in a reasonable amount of time will result in the insurance company taking alternative action to finalize the claim. Typically, with replacement cost coverage, it is only a matter of days or weeks after that first check for the insurance company to receive the required proof of purchase to issue the second check.

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