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Insurer-Managed Repairs vs Cash Settlements: What Homeowners Need to Know

 

When your home is damaged and you make an insurance claim, one of the biggest decisions is how the insurer will make good on the loss. Will they send out their builders to fix your property (insurer-managed repairs), or will they offer you a cash payout to handle it yourself (cash settlement)? This choice can have a huge impact on the outcome of your claim, your stress levels, and even your wallet. It’s not always straightforward, and sometimes the choice isn’t even yours to make, so it pays to understand both options in depth.

In this guide, we’ll explain clearly what insurer-managed repairs and cash settlements involve. We’ll go through the pros and cons of each (including a handy comparison table), share real-world examples of successes and pitfalls, and give practical tips on protecting yourself. You’ll learn about common tactics insurers use that can affect your claim, important policy terms (like lifetime repair guarantees and maintenance exclusions), and how to challenge decisions if things go wrong. Our aim is to empower you with knowledge so you can make the best choice for your situation. Let’s dive in.

 

Understanding Your Options: Insurer-Managed Repairs vs. Cash Settlement

Insurer-Managed Repairs: This is when the insurer takes charge of fixing the damage to your home. The insurance company engages its network of builders, trades, or specialists to repair or rebuild the property to the condition it was in before the damage. In theory, this means the insurer manages the entire process – they find the contractors, approve the scope of works (what needs to be done), and pay the bills. A common feature of insurer-managed repairs is a lifetime guarantee on repairs, meaning the insurer guarantees the workmanship of the repairs for the life of the home (or as long as you own it). This can give you peace of mind that if a repair wasn’t done properly, the insurer will fix it later. Insurer-managed repairs are typically done on a “like-for-like” basis – the goal is to restore your home to its previous state, not to upgrade or improve it beyond what you had. The insurer will aim to use materials and designs similar to the original. They also handle related logistics like removing debris, storing your contents if needed, and managing permits or inspections as part of the claim service.

Cash Settlement: A cash settlement is when the insurer offers you money instead of arranging the repairs themselves. In a cash settlement, you receive a payout (usually a bank transfer or check) for the amount the insurer calculates it would cost to repair the damage. In theory, this amount should be enough for you to independently arrange “like-for-like” repairs to your home. However, in practice the cash offered is not always enough to cover a true like-for-like fix. Once you accept a cash settlement, you become responsible for getting the damage repaired using that money. The insurer’s involvement usually ends with the payment – there’s no automatic guarantee on the repair work because the insurer isn’t the one managing it. You have the freedom to choose your own builders or to use the funds how you see fit, but you also take on the risk and project-management burden that comes with that freedom.

Who Decides? Many home insurance policies give the insurer the right to decide whether to repair, replace, or cash settle. It’s not always the customer’s choice, your policy’s Product Disclosure Statement (PDS) will usually state that the insurer can elect how to fulfill the claim. In practice, straightforward claims are often handled with insurer-managed repairs, but there are situations where an insurer might opt to cash settle instead (or vice versa). Here are some common scenarios:

     

      • Maintenance or pre-existing issues: If part of the damage is due to wear-and-tear or lack of maintenance (which policies generally exclude), the insurer might refuse to repair that portion. For example, say a storm damaged your roof but the roofer reports the gutters were rusted out beforehand, the insurer may fix the storm damage but not the rusty gutters. In such cases, insurers sometimes offer a partial cash settlement for the excluded portion or even for the whole job, leaving you to sort out the mix of covered and uncovered repairs. This avoids them having their builder fix things that aren’t covered. It’s a controversial tactic, and it can put homeowners in a tough spot if a repair won’t be effective without addressing the maintenance issues too.

      • They “can’t warrant the repairs”: If an insurer feels it cannot guarantee the outcome of repairs, they might lean towards a cash settlement. This could happen if the damage is complex or the home had an existing defect. For instance, if the soil under a house is unstable or there are structural issues unrelated to the claim, the insurer’s builder might hesitate to rebuild there with a lifetime guarantee. The insurer may decide to just pay out the policy limit or repair cost, essentially saying “here’s the money, but you handle it.” This protects them from being on the hook if the repair later fails due to underlying problems.

      • Breakdown in relationship: Sometimes the relationship between the insurer and the customer deteriorates during the claim (perhaps due to disputes over scope or delays). In such cases, the insurer may decide it’s easier to settle in cash and let the customer take care of repairs, rather than continuing a fraught interaction. From the insurer’s perspective, a cash payout can cap their costs and close the claim. From the customer’s perspective, this can either be a relief (if you’ve lost trust in the insurer’s process) or a headache (if you feel forced to manage a complex repair). It’s always better if you make an informed choice rather than being rushed into one.

      • Capacity issues (disaster scenarios): After major natural disasters (like widespread floods or bushfires), insurers might not have enough approved builders available to handle all the repairs promptly. The builder networks get overwhelmed, leading to long queues. In these situations, some insurers resort to cash settling many claims to clear the backlog. They might not openly admit it, so it could be framed as a generous offer or the only practical solution. Be aware: following large catastrophes, if an insurer suddenly offers cash instead of repair, it might be because they simply can’t deliver the work in a reasonable time, not because the cash amount is necessarily in your best interest. Always evaluate if the amount will truly cover your repairs in the post-disaster market, where builder costs can surge.

    Now that we’ve outlined what each option means, let’s compare their advantages and disadvantages. Every homeowner’s situation is different – what’s a pro for one person might be a con for another – so consider how each factor aligns with your needs and capabilities.

     

    Pros and Cons of Insurer-Managed Repairs

    When the insurer manages the repairs, they take on the logistics and responsibility of restoring your home. This route can be convenient, but it also has its downsides. Here’s a breakdown of some of they key pros and cons of insurer-managed repairs:

    Pros of Insurer-Managed Repairs Cons of Insurer-Managed Repairs
    Insurer handles the heavy lifting: The insurer coordinates the entire repair process – finding builders, scheduling the work, and dealing with permits or debris removal – so you don’t have to manage these tasks yourself. This can reduce your stress and workload during an already difficult time. Loss of control over work and timeline: You don’t get to choose who does the work on your home. The insurer will use their preferred contractors and decide when and how repairs happen. You can find yourself waiting in a long queue, especially after disasters, since you’re on the insurer’s schedule, not your own. Delays are common, and you have limited say in speeding things up.
    Lifetime repair guarantee: Most insurers offer a lifetime guarantee on repairs they arrange. If a defect in the workmanship appears down the track (for example, a repaired wall starts cracking again), the insurer promises to fix it at no cost to you. This guarantee can provide peace of mind – you have somewhere to turn if the job wasn’t done right. Contractors work for the insurer, not you: The builders and tradespeople are paid by the insurer and often work on tight budgets. Their priority may be saving costs for the insurer, which can sometimes lead to rushed jobs or lower quality work. You might not get full transparency on the scope of works or cost breakdown either, making it hard to know if corners are being cut. Remember, if you’re not paying them, you’re not their client – the insurer is.
    “Like-for-like” restoration: The insurer will aim to restore your home to the same condition it was in before the damage. They will calculate what needs to be done to meet that standard, and if anything is missed initially, their process allows for variations (adjustments) to the scope as more damage is uncovered. This means you don’t have to perfectly identify every repair needed upfront – if additional issues related to the claim are found during repairs, the insurer can approve extra work (though it might cause some delays). “Like-for-like” can have a downside: Restoring to exactly how things were isn’t always ideal. If your home had any vulnerable features or didn’t meet current standards, insurer-managed repairs may simply rebuild those same issues. For example, if your home was flooded, they will rebuild it exactly as it was prior, potentially putting your home back “in harm’s way” of future floods. They generally won’t pay for upgrades or improvements that would make your home safer or more valuable, unless required by current building codes or laws.
    Less upfront cost exposure: Because the insurer is directly paying the contractors, you shouldn’t have to pay anything beyond your policy excess (deductible). They also handle covered extras like debris removal, engineers or specialists needed for the repair, and alternative accommodation if included in your policy. These are built into the claim. You’re less likely to accidentally miss a benefit because the insurer’s team is supposed to account for all that in the repair process. Risk of out-of-pocket surprises: If the insurer or their builder decides some damage isn’t covered (for example, they label it “pre-existing” or due to poor maintenance), they won’t fix that as part of the insured repairs. You might only find this out once the builder is on site – leaving you to cover that portion yourself or live with an incomplete repair. In other words, the process might stall unless you pay extra for non-covered work. You could also face costs if the repair runs long and your temporary accommodation benefit runs out. However, an insurer will usually extend this.
    Reduced administrative burden: With insurer-managed repairs, there’s less need for you to obtain quotes or manage contracts. The insurer’s loss adjusters and builders work out the scope among themselves. For a lot of people, especially those not comfortable dealing with building works, this is a relief. You don’t have to become a project manager – in an ideal scenario, you can sit back and let the insurer handle it. Difficult to exit once underway: If repairs are going poorly or dragging on, you can’t easily switch and ask for a cash payout instead, at least not without a fight. Once you’ve agreed to let the insurer manage repairs and work has begun, getting the insurer to change course (for example, to cash settle you mid-way) is very hard. You are essentially locked into their process, even if it’s not meeting your expectations. Your main recourse is to complain and hope they improve the service, or in extreme cases escalate to external dispute resolution.

    As we can see, insurer-managed repairs can spare you a lot of personal hassle and come with a valuable guarantee on the work. However, they also require a lot of trust, you’re trusting that the insurer’s contractors will do a good job and not cut corners. You also surrender some control over your own home’s restoration. Next, we’ll look at the flip side: taking a cash settlement.

     

    Pros and Cons of Cash Settlements

    Opting for a cash settlement puts you in the driver’s seat, you get funds to manage the repairs on your own terms. This flexibility can be great, but it comes with responsibilities and risks that you need to be prepared for. Here are the major pros and cons of taking a cash payout:

    Pros of a Cash Settlement Cons of a Cash Settlement
    Freedom and flexibility: A cash settlement gives you the freedom to choose how, when, and with whom to repair your home. You can hire contractors you trust, schedule repairs at your convenience, or even do some DIY if appropriate. You’re not limited to the insurer’s preferred suppliers or timelines – you regain control over the process. This flexibility also means you can tailor the repairs to your preferences, perhaps upgrading materials or making design changes (not covered by insurance, but you can fund differences out-of-pocket). For instance, if the kitchen was damaged, you might decide to add some of your own money to the payout and install nicer cabinets or appliances than you had before. You assume all the project risk and effort: Once you take the cash, organising repairs is entirely your responsibility. That means finding reliable builders or trades, getting quotes, and supervising the work to completion. You’ll need to manage any issues that come up, if the builder is delayed or does a poor job, you have to handle it, because the insurer is now out of the picture. Essentially, you become the project manager for your claim. This can be time-consuming and stressful, especially if you’re not experienced with building projects.
    Potential to save or use funds strategically: If you’re savvy, you might find ways to repair for less than the insurer’s payout and use leftover funds elsewhere. Some homeowners choose cheaper materials or finishings, or have a handy friend help with repairs at lower cost. In some cases, you could use part of the money to address other issues that insurance wouldn’t have covered (such as fixing some pre-existing defects while the builders are already on site). You could also potentially combine the payout with other money, disaster relief grants, government rebuild programs, or your savings, to undertake a bigger renovation. Cash in hand gives you the flexibility to think beyond just a like-for-like repair. Payout may be insufficient to complete repairs: A very common pitfall with cash settlements is that the amount offered doesn’t cover the true cost to fix the damage. Insurers often base the payout on their expected cost (what it would cost them to get it repaired), which can be lower than market rates. They negotiate bulk discounts with their contractors, but you as a one-off customer might have to pay more. Also, if the insurer’s scope of works was incomplete or prices rise, you could end up out-of-pocket. Once you’ve accepted the cash, the insurer’s obligation usually ends – if you discover additional damage or higher costs later, you’ll generally have to cover it yourself. In short, you bear the risk of the repair cost overruns.
    Control over quality and design: With cash in hand, you get to decide on materials, finishes, and who does the job. You could aim for higher quality work than the insurer’s basic fix, or choose a builder with a great reputation (even if they cost a bit more). You’re not stuck with the one-size-fits-all approach. Many people appreciate being able to, say, paint the house a new colour or reconfigure a space during repairs – things an insurer likely wouldn’t pay for. You can ensure the work meets your standards (since you’ll sign off with your builder). No insurer warranty on repairs: Unlike insurer-managed repairs, a cash settlement leaves you without that lifetime repair guarantee from the insurer. If the workmanship is faulty or something goes wrong down the track, it’s on you to sort out with the builder (or through building warranty laws if applicable). The insurer won’t come back to fix defects once you’ve taken the money. This makes it crucial to choose reputable, licensed contractors and maybe even consider paying for independent inspections for quality assurance.
    Escape a bad claims experience: If you’ve lost faith in the insurer’s process or had a contentious relationship with their assessors, cash settlement can be a way out. You take the money and avoid further arguments with the insurer about how repairs are done. For example, if every conversation with the insurer has been a fight, handling it yourself might give you peace of mind and a sense of empowerment. It essentially “ends” the claim on your terms. Possible loss of other benefits: When you accept a cash settlement, check what happens to other benefits in your policy. You might lose coverage for things like temporary accommodation, contents storage, or other support once the claim is finalized. Sometimes insurers include a portion for these in the cash offer, but if the repair takes longer than expected, you could run out of funds for living expenses. Make sure the settlement accounts for all aspects of your recovery, not just the building repair.
    Ability to plan for the long term: Cash settlement allows you to rebuild with the future in mind. For instance, after a flood, an insurer-managed repair might just fix the damage, but with cash you could choose to rebuild more resiliently (like raising your home higher, or using water-resistant materials) by investing extra money. This could make a huge difference in future insurability and safety, even though it’s beyond the scope of the original claim. You have the freedom to not simply replicate the past if you’re willing to put in some extra resources. Negotiation and knowledge required to get a fair deal: Getting a fair cash settlement is often a fight. Insurers may start with a low offer, expecting you to negotiate. It’s up to you to prove what the repairs will truly cost. This means you should ideally get independent quotes and scrutinize the insurer’s scope of work. If you’re not thorough, you can short-change yourself. Accepting a lowball offer can leave you financially strained, so there’s an onus on you to push back and ensure all damage is accounted for and adequately priced. This process can take time and confidence, and if you accept an insufficient amount out of desperation or fatigue, you might regret it later.

    Choosing the cash route gives you autonomy and, potentially, the chance to come out better if you manage everything well. But it also transfers significant risk to you, the homeowner. You need to be confident that you can see the repairs through with the money provided (and have some extra funds available just in case).

    Both paths have merit and pitfalls. The best choice depends on factors like the complexity of your claim, your personal bandwidth to manage a project, the trustworthiness of the insurer’s contractors, and how fair the insurer’s offer is. Next, we’ll look at some common insurer practices to be mindful of, and then some real-life examples that illustrate how things can play out.

     

    Common Insurer Practices That Can Affect Your Outcome

    Insurance companies deal with thousands of claims, and they have developed practices (some good, some not so good) that can impact how your claim is resolved. Being aware of these behaviors can help you anticipate issues or advocate for yourself:

       

        • “We choose the option, not you” per policy: Most insurers reserve the right to decide whether to repair or cash settle. If you strongly prefer one option, you may need to present a case for it. Some people assume they can just demand a cash payout or insist on repairs, but unless the policy grants you that right, the insurer calls the shots. That said, good insurers will listen to reasonable requests. If you have a valid reason (e.g. you live remotely and no local builders will contract on the insurer’s rates, or you’re extremely uncomfortable with their chosen builder), communicate that. They might accommodate you to avoid a protracted dispute. It is important to note that if the insurer elects to cash settle, they have to pay you what it would cost you to get the works done. This means that the cash settlement should not be based on their quotes. Instead, you should get your own quotes.

        • Low initial offers (for cash settlements): It’s not uncommon for the first cash offer to be on the lower end. The insurer might hope you’ll accept quickly. They often have wiggle room, so it pays to question and, if needed, challenge the amount. Ask for the detailed scope of works and how they priced it. Don’t be shy about getting your own quotes as a comparison. We’ve seen cases where an insurer’s offer wouldn’t have been enough to cover crucial repairs because certain costs were underestimated or omitted. By pushing back with evidence, customers have gotten tens of thousands of dollars more added to settlements.

        • Reliance on preferred contractors: Insurers have preferred contractor networks (builders, plumbers, etc.) that agree to set rates. Sometimes the workmanship is excellent, but other times the contractor might cut corners to stay profitable under the insurer’s low pay rates. One structural issue in the industry is that if contractors aren’t paid well for initial work, they lack motivation to come back and fix issues later. A “lifetime guarantee” sounds good, but if the repair firm goes bust or drags their feet on warranty work, that guarantee might be hard to enforce. Insurers may step in to honor it with a different contractor, but don’t underestimate the hassle factor. Always document problems and report them promptly if workmanship isn’t up to par. The most complicated claims that Claims Hero has seen often involve failed initial building repairs by an insurer appointed contractor who fails to address quality issues.

        • Finding ‘maintenance’ to avoid full liability: A frustrating practice some customers encounter is when an insurer’s assessor or builder overemphasises pre-existing issues to reduce the scope. For example, after a storm claim, an insurer might say “the water came in because the window seal was past its lifespan, which is a maintenance issue, so we’ll only pay to repaint the damage, not fix the seal.” Identifying genuine maintenance issues is fair, but sometimes it can be overused or exaggerated as a cost-saving tactic. In extreme cases, especially following disasters when repair resources are stretched, insurers have suddenly “discovered” maintenance problems to justify giving a cash payout instead of repairing, because they can’t handle all the repairs in time. If you believe an insurer is unfairly blaming pre-existing conditions for the damage, you can push back, request evidence, provide your own expert report, or escalate a complaint.

        • Settling to avoid complaints: If a claim is getting messy, insurers know that a formal dispute (like going to the Australian Financial Complaints Authority, AFCA) can cost them time and money. Sometimes, showing that you’re informed and willing to stand up for your rights encourages the insurer to resolve things more favorably. This could mean a better cash offer or fixing an issue that was previously denied. We’ve found that 80%+ of insurers will engage constructively when customers (or their advocates) present issues clearly and back them up with facts. Simply mentioning that you are aware of your rights and willing to escalate if needed can shift the tone toward a more fair outcome, as long as you remain reasonable and factual in your requests.

      Understanding these dynamics, you can see why it’s so important to stay proactive in your claim. Next, let’s look at a few real-life scenarios that show how choosing repairs vs cash can play out, for better or worse.

       

      Real-Life Case Studies: Pitfalls and Successes

      To illustrate the differences between insurer-managed repairs and cash settlements, here are a few case studies. These highlight common pitfalls and some successes that homeowners have experienced:

         

          • Case Study 1: The Never-Ending Repair – An insurer-managed repair gone wrong. After a severe thunderstorm, Alice (not her real name) had part of her roof damaged and water through her ceiling. Her insurer opted to manage the repairs. The process started well, a builder came out to assess and works were approved. But as months dragged on, she faced constant delays. The insurer’s builder was juggling dozens of jobs and often didn’t show up when scheduled. When the roof was finally fixed, the interior repairs had to wait another long stretch, leaving Alice living with torn-out walls. Communication was poor; Alice felt like a “number in the queue.” Worse, some of the workmanship was subpar, a ceiling patch began cracking a few weeks later. Alice reported it, and though the insurer had to honor their lifetime repair guarantee, getting the contractor back was like pulling teeth. Her property became impacted by mould, and it took her to engage Claims Hero to have the insurer acknowledge the errors in the initial repairs. Lesson: Even with a guarantee, insurer-managed repairs can become a nightmare if the insurer’s contractors are overburdened or not high quality. If you’re in this situation, keep records of every delay and defect, and don’t hesitate to escalate a formal complaint if your home is not being restored in a reasonable timeframe.

          • Case Study 2: The Underfilled Payout – A cash settlement pitfall. Brian had his bathroom and hallway flooded from an accidental burst pipe. The insurer’s assessment team offered him a cash settlement of $15,000 to cover retiling, plumbing fixes, and repainting. Exhausted by the claim process and tempted to just take the money, Brian agreed without getting independent quotes. Once he started hiring contractors, he realized the insurer’s scope had missed crucial work, the subfloor was water-damaged and needed replacement, and there were electrical issues caused by the flood. The true cost to fix everything to a decent standard was closer to $100,000. Because Brian had signed a settlement release, the insurer was off the hook. He tried to argue that the additional damage was part of the original claim, but it was an uphill battle since he’d accepted the payout. He ended up using his credit card and savings to cover the shortfall. Lesson: A cash offer might seem convenient, but you must ensure it’s truly adequate. Get a second (or third) opinion on the required repairs before signing off. If Brian had done that, he could have gone back to the insurer to negotiate a higher amount or even let them handle the repair if the offer was unfair.

          • Case Study 3: Cashing Out and Coming Out Ahead – When a cash settlement enabled a better outcome. Maria and Tom owned an older home that suffered significant damage in a flood. Their insurer was prepared to manage the repairs, but the couple was worried. The house had some old wiring and design issues; simply repairing to old condition felt like a missed opportunity. After some discussion, they convinced the insurer to cash settle the claim for the full repair cost plus an allowance for some code upgrades that would have been required. They added their own savings and a government disaster grant to this amount. With those funds, they hired a builder to not only fix the damage, but also life and raise their home out of harms way. They also opted for more resilient building materials. In the end, they spent more than the insurer paid, but they essentially got a partially renovated, safer home out of it, something the insurer’s like-for-like repairs would never have given them. The key was that they carefully budgeted and planned the project, and chose a reputable builder. Lesson: If you have the means and vision, a cash settlement can be an opportunity to improve your home. Just be sure you have the financial cushion and project management ability to see it through. And make sure the insurer’s payout is maximised (don’t leave covered money on the table) by documenting all claim-related damage and necessary repairs.

        These examples show that both options can succeed or fail. Insurer-managed repairs can be smooth and guarantee-backed, but they can also leave you feeling powerless if things go wrong. Cash settlements can give control and opportunity, but if misjudged, they can leave you out of pocket. The next section provides some practical advice on how to protect yourself no matter which route you go down.

         

        How to Protect Yourself and Get the Best Outcome

        Whether your claim is being repaired by the insurer or you’re considering a cash settlement, there are steps you can take to protect your interests. Here’s how to be proactive and savvy in navigating the choice:

           

            • Understand your policy and rights: Start by reviewing your Product Disclosure Statement (PDS) to see what it says about settlement options. Does your insurer explicitly have the “right to choose” the repair method? Are you allowed to request a cash settlement or use your own repairer? Knowing the rules helps you negotiate. If the policy leans in the insurer’s favor (as many do), you’ll need to rely on polite negotiation and advocacy rather than entitlement.

            • If insurer-managed repairs are underway, stay engaged: Don’t just assume everything will be taken care of perfectly. Stay in contact with the claims officer and the builder. Ask for the scope of works that the insurer approved – you have a right to know what repairs are planned. If something is missing or you spot damage that isn’t addressed, raise it in writing as soon as possible. Keep notes, take photos of damage, and document any conversations. This creates a paper trail in case you need to escalate issues later. While you shouldn’t have to micromanage, it’s still your home – no one cares about its outcome more than you do.

            • If offered a cash settlement, get your own quotes: This point cannot be stressed enough. An insurer’s quote may underestimate the real-world cost. Contact local licensed builders or trades and have them provide quotes for the repair work based on the same scope (or better, an independent assessment of the full scope of damage). Having multiple quotes will tell you if the insurer’s number is fair. Make sure the quotes are itemised similarly to the insurer’s version so you can compare apples with apples. And check that the contractors who quote are actually available and willing to do the job for that price, sometimes a quote is cheap just to win work, but later the builder might upsell or discover it’s not profitable. For the purpose of understanding the costs, it’s important the builder ensures all costs are accounted for. 

            • Insist on a proper scope of works: Whether it’s repairs or cash, a proper assessment of the damage is crucial. Don’t accept vague or cursory scopes. If, for example, you had a major leak, has the insurer accounted for checking mould or structural timber damage? If tiles are cracked, has the underlying waterproofing been inspected? Sometimes you might need specialist reports (engineer, hygienist, etc.). It might delay things a bit, but it’s better to know all the issues now rather than find out after settling. If the insurer won’t do it, you might consider paying for an independent inspection, it could save you money by uncovering damage that should be covered.

            • Consider contingencies: In a cash settlement, try to negotiate a contingency allowance on top of the quoted repairs. This is extra money to cover unforeseen problems that might emerge once work starts (for example, finding hidden rot inside a wall). Insurers won’t always agree, but if you can show that repairs often have, say, a 10-15% overrun for hidden issues, AFCA rulings have sometimes supported adding a contingency in complex claims. Even if you can’t get an official contingency amount, mentally budget for surprises. Don’t allocate every dollar without keeping some in reserve. You can also review AFCA determinations on their website, which can be used to support the claim for contingencies. If the insurer is unwilling to offer a contingency, ensure you make an AFCA complaint. 

            • Don’t forget alternative accommodation and other benefits: If your home is unliveable during repairs, your policy might cover temporary accommodation costs. Clarify with the insurer how this will be handled in both scenarios. In insurer-managed repairs, they might directly pay for a rental until the house is fixed (up to a limit). In a cash settlement, check if they are including an allowance for rental costs, or if they will still reimburse you separately. Similarly, if your contents need storage, or if you need to hire architects or council permits for rebuilding, ensure those costs are considered. These can be significant and should form part of the claim if covered. Don’t let these “add-ons” fall through the cracks when taking a cash deal.

            • Beware of signing away your rights: Insurers may ask you to sign a release form when you take a cash settlement, which typically means you can’t come back for more money on that claim. Read any documents carefully. It is worth getting legal advice before signing a release, especially on large claims. Ideally, the release should be limited, for example, it might exclude your rights to claim if new, unrelated damage is discovered later (so you retain the ability to claim if something was truly hidden and caused by the original event). If you’re uncomfortable, discuss it with the insurer; sometimes they can tweak the wording. Remember, once you sign, it’s game over for that claim, except for any specific conditions noted.

            • Keep your mortgage lender in the loop: If you have a mortgage on the house, large insurance payouts sometimes are made out to both you and the bank, or the bank might require the money be used for repairs (to protect their security interest). Before deciding on a cash settlement, check if your lender has any say. In some cases, the lender might hold the funds in trust and release them as repairs are completed. This isn’t usually an issue for insurer-managed repairs since payments go directly to builders, but for cash, be prepared for the bank’s involvement for big payouts. Usually if you still have sufficient equity to cover the remaining loan, they will usually release the funds. Speak to a financial advisor to understand how this may impact you. 

            • Know when and how to challenge decisions: If you feel the insurer’s choice or offer isn’t fair, speak up early. First, escalate within the insurer – ask to talk to a manager or the internal dispute resolution team. Provide reasons (and evidence) for why you need a different approach. For example, “The builder’s quote you used is missing X, Y, Z items which are necessary, here’s an independent quote that includes them.” If you hit a wall or unreasonable refusal, you have the option to take your dispute to the Australian Financial Complaints Authority (AFCA). AFCA is an external ombudsman service that can review insurance disputes impartially. It’s free for consumers. If, say, your insurer won’t increase a lowball cash offer or refuses to address shoddy repairs, you can lodge a complaint with AFCA and they will examine if the insurer is meeting their obligations. Sometimes the mere threat of AFCA involvement prompts a more cooperative attitude from the insurer, because no insurer wants a track record of complaints. Don’t hesitate to use this avenue if you’re at an impasse, it exists to protect customers in exactly these situations.

            • Consider getting expert help: If the claim is large or you’re feeling out of your depth, you don’t have to go it alone. You can consult independent loss assessors, builders, or claims advocacy services (like Claims Hero) who specialise in insurance claims. They can provide advice on whether an insurer’s repair scope is adequate, or what a fair settlement amount would be. While some services may charge a fee or take a percentage of the payout, their expertise can save you from costly mistakes and ensure you’re not short-changed. Even a one-off consultation with a building consultant or insurance lawyer can give you clarity on the best path forward.

          By following these practices, you’ll be in a much stronger position to get a fair outcome, whichever option you end up with. The key theme is to be informed and not rush into any decision until you’re comfortable that it’s the right one.

           

          Conclusion

          Navigating the choice between insurer-managed repairs and a cash settlement is one of the most important aspects of a home insurance claim. Each option has its advantages: letting the insurer handle repairs can be simpler and comes with a workmanship guarantee, while taking a cash payout offers flexibility and control. Conversely, each has its drawbacks: insurer-run repairs might leave you frustrated by delays or quality issues, and cash settlements can leave you holding the bag if the money isn’t enough or if you hit unexpected hurdles.

          The right choice depends on your unique situation. Consider factors like the scope of damage, your confidence in the insurer’s contractors, your ability (and willingness) to manage a renovation project, and the fairness of the insurer’s offer. Always remember that you have the right to ask questions and seek clarification. Don’t be afraid to request information or challenge something that doesn’t seem right, it’s your home and your claim, after all. By being proactive, informed, and maybe a bit persistent, you can significantly improve your chances of a successful outcome.

          In the end, the goal is to get your home back to normal with as little further heartache as possible. Whichever route you take, keep the endgame in mind: a safe, sound home and a fair deal from your insurer. If you’re ever unsure, seek independent advice before signing on the dotted line. Knowledge is power in the insurance process, and hopefully this guide has given you a healthy dose of it to tackle your claim with confidence.

          Disclaimer: This blog contains general information only and does not take into account your specific situation. You should obtain independent advice before making any decisions.