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Rebuilding After a Disaster: Contractors and Insurance Payments

A damaged home can require urgent work while an insurance claim and mortgage obligations are still being sorted out. Those pressures make the contract and payment schedule especially important. Confirm who will do the repairs, what the insurer is paying for, and whether a mortgage servicer must participate before committing money or signing away control of a claim.

The questions below use selected Consumer Financial Protection Bureau guidance, adapted and organized by Fynoptic. Source links and the dates displayed by those sources are provided at the end.

How can I find and work with contractors to rebuild after a disaster?

Do some research and get several bids when choosing contractors to help you rebuild your home. After a disaster, scammers may try to take advantage of you, so be alert.

If your home or other property suffered damage from a disaster, you may need a contractor to help you rebuild. Don’t rush into the decision. You have time to research your options and check credentials. Before you hire contractors, check with your insurance company and your mortgage company or servicer about how and when insurance funds are distributed.

Think about the long-term and working with the right contractor could mean the difference between settling back in your home a year from now, or still dealing with costly repairs because your contractor never finished the work. Many people hire contractors soon after a disaster to begin repairs quickly on their home or business.

How to find a trusted contractor to repair your home after a disaster

Explore your options, compare services, and do some research to make sure you hire a contractor with a good record.

Some “Do’s and Don’ts” of finding a contractor

“Do’s” “Don’ts”

Research may help you uncover problems with contractors such as billing, quality of work and materials, and timeliness.

  • Ask for referrals from people you trust
  • Get bids from providers recommended or listed by your insurance agent.
  • Reach out to your local builders’ association or remodelers’ council for the names of members in your area
  • Get written estimates from at least two to three contractors to compare offers

People without references or a local history may not be trustworthy.

  • Pick someone going door to door
  • Pick someone from out of state
  • Work with someone who refuses to show ID or contact information
  • Make any upfront payments without a signed contract

Questions to ask before hiring a contractor

  • Do you have references? Ask the contractor to put you in touch with past customers to find out if people are satisfied with their work, construction materials, and pricing.
  • How long have you been in business? You may want to work with someone who has a proven track record in your town or city.
  • What is your contractor license or registration number? Write it down and look it up on your state contracting board or agency’s website, or call their hotline to make sure it’s valid. If they aren’t listed, they’re not a good option. You should also check with your state’s licensing board and state attorneys general office to see if the contractor has any public or disciplinary complaints against them. Then, do your own research and look for online reviews.
  • Do you have general liability insurance and workers' compensation coverage? It’s important for contractors to be insured in case something happens at the worksite.
  • Is a building permit required and who is responsible for getting that permit? Depending on where you live, a permit may be required before work can legally start.

For a full list of questions, consult FEMA’s Checklist of Questions to Ask Your General Contractor.

Working with contractors

Once you’ve picked a contractor you feel comfortable working with, you still need to be careful. It’s important to keep written records and receipts of all work especially if your insurance company or the Federal Emergency Management Agency (FEMA) pays for the work. Be sure to track any payments to the contractor and the progress of their work. If you’re borrowing money to pay for repairs, do your own research to find the best lender for you. Don’t just take a contractor’s referral without shopping for other lenders and checking references.

Get copies of these documents before work begins:

  • Signed contracts
  • Guarantees
  • Warranties

Document what you’ve agreed to with the contractor. If the contract is for a significant amount of money, you may want to have it reviewed by a lawyer. Never sign a contract without carefully reading it, and always ask questions. Keep in mind that you can always walk away if you feel uncomfortable.

Be sure to record:

  • Who will pay for materials
  • Quantity and quality of materials
  • Who will obtain necessary permits or licenses
  • Project start and completion dates
  • A total price and a schedule for any payments
  • All verbal promises

“Do’s and Don’ts” for paying your contractor

“Do’s”: “Don’ts”:
  • Get a receipt for all payments
  • Keep documentation
  • Pay with cash
  • Make the final payment until the work is completed to your satisfaction

If there are problems while working with your contractor

Here is what you can do if repairs aren’t properly made or you believe you’ve been ripped off:

How do home insurance companies pay out claims?

If your home is damaged, your home insurance company sends out an adjuster to look at the damage. The company then determines your settlement amount or how much you’ll be reimbursed to make repairs.

A homeowner’s insurance policy pays for losses or damage to your property if something unexpected happens. Once the insurance company sends an adjuster and evaluates the damage to your home, they pay a settlement amount in either replacement cost or actual cash value, depending on the provisions in your insurance policy.

Replacement cost gives you money to cover the costs to rebuild your home or repair damages using similar materials or achieving similar quality at today’s prices. Actual cash value gives you money to repair or rebuild based on the value of your home, considering its age and condition or market value. Keep in mind that the actual cash value of your home may not match the replacement cost. The materials and labor needed to replace your home or parts of your home often cost more than the actual cash value.

When can I use the money from my insurance payment?

Your homeowner’s insurance company generally pays your settlement with a check made out to both you and your mortgage servicer or lender. Most mortgage agreements require this to protect the lender’s interest. Typically, your servicer releases a portion of the settlement money before work begins so you can hire a contractor. As the work progresses, the servicer typically releases more money. The rest is released once the job is finished and the home passes inspection.

If you have a mortgage, you are still responsible for making your payments while your insurance claim is paid out. Learn what to do if you’re having trouble making mortgage payments because of a disaster or other emergency.

What do I do if my house was damaged or destroyed, or if I’m unable to make my payment after a disaster?

After a disaster you still have to pay your mortgage. However, there are steps you can take to get help. Start by contacting your insurance company to file a claim.

What steps should I take after my home was damaged or destroyed in a disaster?

There are three things to do to start the recovery process when your home was damaged or destroyed in a disaster.

Step 1: Call your insurance company to file a claim.

Step 2: Apply for aid from government organizations.

Step 3: Contact your mortgage servicer and let them know what happened. If you can’t make your payments, ask to adjust your payments so you don’t fall behind and incur fees or face foreclosure.

What steps should I take if I can’t live in my home after a disaster?

If you are unable to return to your home, you may qualify for assistance.

The Federal Emergency Management Agency (FEMA) may provide Transitional Sheltering Assistance (TSA) to eligible disaster survivors with a continuing need for shelter after the temporary shelters have closed. This initiative provides short-term lodging for eligible disaster survivors whose communities are either uninhabitable or inaccessible due to disaster-related damages.

FEMA may help you with displacement costs

  • Reimbursement of hotel expenses for short-term lodging
  • Initial rent money, plus a security deposit, to find a place to live if you can’t return to your home
  • Continued rental assistance for up to 18 months for qualified applicants while your home is being repaired

FEMA also has housing assistance programs for people whose homes have been destroyed, including financial assistance to help with any additional cost of replacing your home that isn’t covered by insurance.

Learn more about FEMA’s housing assistance programs.

How can I avoid foreclosure after disaster?

If you’re struggling to make your mortgage payment or can’t meet your reverse mortgage obligations, such as paying taxes and insurance, there are resources and potential options to avoid foreclosure.

Call your mortgage servicer

If you haven’t already, start by calling your mortgage servicer.

Be sure to ask:

  • What options are available to help me temporarily reduce or suspend my payments?
  • Are there forbearance options?
  • Can you waive late fees?

The amount and type of aid you receive may depend on the type of mortgage loan you have.

If you have a mortgage loan that is not insured or sponsored by entities, like Fannie Mae and Freddie Mac , any disaster relief or assistance will be up to the owner or servicer of your loan. There are federal rules that allow, but do not require, an owner or servicer to offer help in the event of a disaster.

For example, government-sponsored or government-insured mortgage loans have guidelines that allow servicers to stop or delay a foreclosure proceeding.

What government backed mortgage disaster resources are available?

If you have a government insured or sponsored mortgage, they may have specific programs to assist you. Here are some useful links:

Government programs and services may have application deadlines. Sometimes these application deadlines are extended, so check the program website to get the most current information.

Other foreclosure resources

Sources and further reading

The CFPB source passages are U.S. government work in the public domain. Fynoptic has selected, organized, and adapted the material for this guide, including corrections identified through the additional sources listed above. Sources accessed October 27, 2026. This use does not imply agency endorsement or affiliation.

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