What is an option to repair provision?

If you have an option to repair provision in your homeowners policy, your insurance company may choose to invoke it after a covered loss. This moves the responsibility of hiring contractors, negotiating prices, and keeping tabs on the work being done to your insurance company. 

There are benefits to invoking an OTR provision for your insurer, too. One of the main advantages is working with a contractor it knows and trusts. Your insurance company has a vested interest in making sure your home is returned to its preloss condition, and hiring a reliable contractor is key to making sure that happens.

How does an option to repair provision work?

Let’s say your home is damaged by a covered peril, so you file a claim with your insurance company. That triggers several events for your insurance company, including: 

• Assigning an insurance adjuster to your claim.

• Checking if your policy has an option to repair provision. 

• Determining if your claim qualifies for it. 

If your claim qualifies for the option to repair, your insurer may decide to invoke the provision. 

First, your insurance company’s adjuster confirms coverage for the loss. Once that is confirmed, the adjuster's next step is to find a contractor. How that happens depends on the insurance company. Some use a contractor from the insurance company's list of preferred contractors or from a program the insurance company maintains. Others obtain bids and select the most qualified and appropriate contractors for your repair work. 

However contractors are selected, they're responsible for:

• Inspecting the damages.

• Estimating the cost of the repairs.

• Working with you to schedule and complete the repairs.

The contractor the adjuster selects should  give your insurance company an approved scope of work that includes information on the labor and materials needed to complete the repairs. Your insurer should then give you a copy.

Your insurance company pays the contractor directly, so there’s no hassle with claim payments and your mortgage company.

Your role is rather small when the OTR is invoked. Your contractor will most likely require you to sign a work authorization to allow them to perform the repairs. Other than that, the most important thing to remember is to pay your deductible. It goes directly to the contractor.

How an OTR provision takes stress out of the claims process

What happens when an insurer invokes the option to repair provision in my policy?

The process for the option to repair provision is pretty much what’s been explained above. During the claims process, your insurer decides whether or not it's going to invoke the provision, usually after it has determined that your loss is covered by your policy.

Once your insurer invokes the OTR, then it takes on the responsibility of finding a qualified contractor to complete the repairs for your covered loss. The contractor works directly with your insurance company, allowing for quicker repairs and far less hassle for you. And your insurer most likely won't need to hold any money back or include your mortgage company on any payments, so the process won’t be held up waiting for recoverable depreciation or waiting for your mortgage company to sign the check.

What’s more, the contractors often provide warranties for your repairs and roofing materials that you might not be able to find on your own.

Remember, you’ll still be responsible for paying your deductible. But if you can’t afford the out-of-pocket expenses upfront, these contractors may be able to offer you financing for the amount that you’re responsible for paying.