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Can you keep home insurance claim money?
I just received more money from my insurance company than I need to complete my repairs after a burst water pipe. I think the repairs will be less than what I was paid. Can I keep the extra home insurance claim money?
Anthony William · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Glad to hear your burst water pipe situation doesn’t sound too troublesome. Technically, you are allowed to keep that additional leftover claim money after a legitimate
home insurance
claim. The real issue only occurs if you misrepresent how much money you need from the beginning of the claim process. At that point, you’re committing fraud. However, if the plumber initially estimated more but the repair ended up costing less, there shouldn’t be an issue.
That said, any gain from insurance claims are considered capital gains, meaning they can be taxed. While normal insurance payouts aren’t taxed, overpayment means you’re gaining income. If this occurs, you may need to report the gain to the IRS on your taxes. A tax professional can help you figure out how to proceed during tax season.
Since filing a claim with your home insurance can increase your premium, consider taking the time to review your insurance options with
Jerry
. A licensed broker, Jerry does all the hard work of finding cheap quotes from the top name-brand insurance companies and buying new home or renters insurance. Jerry will even help you cancel your old policy.View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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