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9 minute read Published on Feb 12, 2026 by BrokerLink Communications
Filing a home insurance claim is never something homeowners look forward to, but it’s becoming increasingly common. In 2022, personal property and casualty insurers collected $17.4 billion in premiums and paid out $9.9 billion in claims, up from $7.9 billion in 2019. This trend shows that more and more homeowners are turning to their insurance as unexpected damage becomes more frequent and costly.
With rebuilding costs continuing to rise, many Canadians are wondering if they can keep their insurance payout and handle the repairs themselves. For some, doing the work personally seems like a practical way to save money and make the most of their claim.
In certain situations, insurance companies may offer a cash settlement cheque rather than overseeing the repair process directly. This gives homeowners the flexibility to manage repairs on their own. But before you pocket that cheque, it’s important to understand how certain home insurance cheque rules could affect your home insurance policy and future claims.
If your home is damaged, whether from fire, water, theft, or another covered event, and you file an insurance claim, your home insurance company will send out an insurance adjuster to assess the situation. Their job is to inspect the damage, review your policy, and determine how much the insurer will reimburse you to repair or replace what’s been lost.
When you pay for home insurance, your premiums go into a pool that the insurer uses to cover claims. If you file a claim, the cost is paid from that pool, but you’re still responsible for your deductible. Your insurance provider covers the remaining eligible costs, up to the limit outlined in your policy.
According to the Insurance Bureau of Canada (IBC), you start the claims process by reporting the damage to your insurance provider. An insurance claims adjuster is then assigned to review your case to confirm it falls under your policy and what your next steps are. You may also be required to submit paperwork, such as a proof of loss form.
If your claim is approved, your deductible is applied (either subtracted from your payout or paid upfront, depending on your policy terms). Then, your insurer covers the rest of the approved amount.
It’s important to note that once you file a claim, it becomes part of your claims history. And that can affect your home insurance premiums, meaning your home insurance company may raise your rates when you renew, especially if you’ve made multiple claims in a short period.
When disaster strikes, your involvement is essential to a smooth claims process. That's why insurance companies and regulators alike stress the importance of clear documentation and timely action. Here's what your insurance company expects from you:
First, you should report the incident as soon as possible, and before you start any repairs. According to the Financial Consumer Agency of Canada (FCAC), most insurance companies require you to file a claim within 90 days to a year, depending on the provider and jurisdiction. Check your policy's terms and conditions for when you need to file. Often, you’ll be asked to complete a proof-of-loss form within 30 days, detailing what was lost or damaged, its value, and when it happened.
You need to keep photos, videos, invoices, and receipts, especially for personal items. Insurance companies strongly recommend you create and maintain a detailed home inventory list for these exact situations. The IBC states to also keep all receipts and invoices for additional living expenses, like meals or lodging, during displacement, to provide to your insurer.
Regulators like the Financial Services Regulatory Authority (FSRA) of Ontario urge insurance providers to clearly communicate timeframes and inform customers if delays occur. You will need to follow up regularly if the process slows or communications drop off.
Most home insurance providers typically don’t want to continue covering a property with unrepaired damage. Your insurer may request proof that repairs have been completed, such as contractor invoices and photos showing the restored areas of your home. If you’re unable or unwilling to provide this documentation, the insurer may choose to cancel your policy or refuse to renew it.
Yes, in many cases, you can accept a cash settlement instead of relying on your insurer to manage repairs. In fact, according to the IBC, in the event of a catastrophic event (like the 2024 Jasper wildfire in Alberta, which is estimated at $1.23 billion in insured losses), a homeowner with insurance typically has two options: they can either rebuild on the original site or accept the depreciated actual cash value (ACV) of the home, which they may choose to use toward purchasing or constructing a home in a different location. However, there are important policy terms to know:
If you have a mortgage, your lender is usually listed as a “loss payee.” According to the FCAC, this clause makes your mortgage lender your beneficiary. That means your insurance provider will typically issue the cheque to the mortgage lender, who would then give you the money for repairs or replacement after you submit receipts as proof.
According to the Canadian Red Cross, many home insurance policies include guaranteed replacement cost coverage. This type of coverage allows you to rebuild or replace your home, even if the cost goes beyond your policy limits, provided that you're rebuilding on the same site and involving your insurer in the process. If you have a guaranteed replacement cost policy, a cash settlement typically isn’t an option.
If your policy provides actual cash value coverage, your settlement will reflect the depreciated value of each damaged or lost item, and not what it would cost to replace them today. That means you’ll receive less than the full replacement cost, potentially leaving you with out-of-pocket expenses for repairs or replacements.
If your home is damaged and your insurer offers a cash settlement, you might be tempted to take the money and manage the repairs on your own. While this approach offers flexibility, it also comes with risks. Here's what you need to consider:
The following table shows the benefits of handling these home repairs on your own:
You have full control over repairs
You get to choose the contractors, materials, and timeline. This can be helpful if you prefer certain finishes or want to take your time with the project.
You could potentially save money
If you can complete the repairs for less than the settlement amount, especially with DIY work, you might come out ahead financially.
You could avoid potential delays
Insurance companies generally have their preferred contractors, who may have long wait times. Managing it yourself could mean faster repairs, especially if you already have trusted professionals lined up.
Below is a table summarizing the cons of tackling these home repairs yourself:
There's no guarantee on workmanship
If you choose to accept a cash settlement, typically your insurer won’t guarantee the quality or workmanship of any repairs. If issues arise with the repair work, it will be your responsibility to resolve them directly with the contractor or builder.
You could face future insurance implications
Accepting a cash settlement, especially for major repairs, may impact your current policy. Your insurer might not continue to offer the same coverage or could decline future claims if repairs aren't completed to standard.
You're taking on a financial risk
If the repair costs exceed your insurance money, you’ll need to cover the difference yourself, meaning you may find that you cannot afford to complete your rebuild.
You're taking on extra responsibility
You’ll be responsible for managing contractors, permits, and timelines.
You may face an investigation
If you choose not to hire licensed professionals for repairs, your insurer may view it as suspicious and could launch an investigation to rule out potential insurance fraud.
You may face restrictions if you have a mortgage
If you have a mortgage, your mortgage lender or bank may need to approve how the funds are used.
If you take a cash settlement from your home insurance provider and choose not to make the necessary repairs, there can be consequences, both for your coverage and your financial protection down the line. Accepting a cash settlement and not doing the repairs—what to expect:
First, your insurer may view this as a risk. If the damage remains unrepaired, your home could be considered in poor condition or unsafe, which might affect your eligibility for ongoing or future coverage. In some cases, your insurer may cancel your policy or refuse to renew it under the same terms. You may also find it harder to get coverage from other providers, especially if the property is inspected or known to be damaged.
Second, if another incident occurs and further damage happens in the same area that wasn’t properly repaired, your insurer could deny the next claim, arguing that the original issue that you chose not to repair made the problem worse.
Finally, mortgage lenders typically require confirmation that major repairs have been completed. If you fail to carry out the repairs, they may step in or even withhold future funds.
Further, suppose your house is destroyed (e.g., wildfire) and you decide not to rebuild. Lenders are protected under the Standard Mortgage Clause, according to the IBC, which allows them to recover up to the remaining mortgage amount from the insurer. If your insurance coverage falls short of the outstanding mortgage balance, you’ll still be responsible for paying the difference out of pocket.
If you're thinking about handling home repairs yourself after receiving an insurance payout, it’s important to have a clear conversation with your insurance company first. Below is a list of questions to ask your insurer to make sure you're both on the same page before you start diving into DIY repairs:
Not all policies allow cash payouts, especially if there's a mortgage involved or if the damage is extensive. You'll need to ask your insurance provider if your claim qualifies for a cash settlement.
Remember, some providers may change the terms of your policy, reduce coverage, or even decline to renew if the repairs aren’t done professionally or within a certain timeframe. Ask them how it'll affect your policy.
Ask what proof you’ll need to provide to confirm that the work was done properly. They may want proof in the form of before-and-after photos, receipts, and permits.
Some insurers may require a post-repair inspection to ensure the property is safe and up to code before continuing or renewing coverage.
Generally, if you accept a cash settlement, you're responsible for any extra costs if the initial settlement isn’t enough. But, it still doesn't hurt to ask.
Clarify whether doing your own repairs could impact future claims, especially if issues arise in the same area. This may help you decide whether you want to continue the DIY route or stick to hiring professionals.
Are you still on the fence about whether you want to accept a homeowners' insurance claim cheque and make the repairs yourself? Contact BrokerLink. Our licensed insurance advisors are ready to help you weigh the pros and cons of doing the repairs yourself and answer any questions you may have about your claim and cash settlements. And if you're in need of a new homeowners insurance policy, we can help you with that, too!
With access to leading insurance providers across Canada, we’ll help you tailor coverage to suit your unique home and needs. If you prefer to speak with someone in person, you can visit one of our many locations across Canada to meet with a local broker. You can also give us a call to speak with a member of our team or send us an email. We also encourage you to take advantage of our free online quote tool that can provide you with a competitive quote in minutes.
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