Choosing Your Contractor After an Insurance Loss

One of the most important decisions you will make after a property loss is who repairs your home. The insurance company may push you toward their preferred vendor or managed repair network. They may tell you it will be “easier” or “faster.” But the choice is yours — and choosing the right contractor directly affects how well your home is repaired.

Your Right to Choose

Under California Insurance Code §758.5, if the insurer refers you to a contractor, they must provide a written disclosure that you are not required to use that contractor. The law is clear: you choose who repairs your home. The insurance company cannot:

• Require you to use their preferred vendor.
• Reduce your payment because you chose a different contractor.
• Refuse to pay reasonable costs because their vendor would charge less.
• Condition claim approval on using a specific repair company.

The insurer owes you the reasonable and necessary cost to restore your property. If your chosen licensed contractor charges more than the insurer's network vendor — and the price is reasonable for your market — the insurer must pay it.

How to Choose a Contractor

Licensing

In California, any job over $500 requires a licensed contractor. Verify the license at the Contractors State License Board (CSLB) website. Check for: active license status, appropriate classification for the work (B for general, C-33 for painting, C-36 for plumbing, etc.), workers' comp insurance, and any disciplinary history.

Insurance Loss Experience

Not all contractors understand insurance work. You want someone who has worked on insurance claims before and understands the process: writing supplements, working with adjusters, documenting scope changes, and navigating the payment cycle. Ask specifically: “How many insurance loss jobs have you done in the last two years?”

Multiple Bids

Get at least two bids, preferably three. This protects you in two directions: it confirms that your chosen contractor's price is reasonable (which defends against insurer pushback), and it protects you from overpaying. Bids should be itemized and detailed — not a single lump-sum number.

References

Ask for references from recent insurance loss jobs — not just regular remodels. Insurance work has unique pressures: payment timing is uncertain, scope can change, and the insurer may dispute line items mid-project. You want someone who handles that smoothly.

Red Flags

• Demands large upfront payment before any work begins.
• Will not provide a written, itemized contract.
• Pressures you to sign immediately (“this price is only good today”).
• Cannot or will not provide license number and proof of insurance.
• Wants you to sign over your insurance check directly to them.
• Shows up uninvited after a disaster (“storm chasers”).
• Offers to waive your deductible (this is insurance fraud in California).
• Refuses to pull permits for work that requires them.

The Payment Process

Insurance claim payments typically arrive in phases:

1. Initial payment (ACV). The insurer pays actual cash value upfront — the repair cost minus depreciation.
2. Supplements. As work proceeds and additional damage is found, your contractor (or PA) submits supplements for the additional scope.
3. Depreciation holdback. After repairs are complete, the insurer releases the withheld depreciation.

A contractor experienced in insurance work understands this payment cycle and can structure their billing accordingly. They will not demand full payment before the insurer has released funds.

When the Insurer Disputes Your Contractor's Price

If the insurer says your contractor charges too much, this is a price dispute — not a reason to change contractors. Your options:

• Submit documentation showing the price is reasonable for your market (other bids, published pricing data, Xactimate local pricing).
• Ask the insurer to identify specifically which line items they dispute and why.
• If the dispute is purely about price and not scope, invoke appraisal to let a neutral process determine the fair cost.

The insurer cannot say “we will only pay what our vendor would charge.” They owe you the reasonable cost of repair. If local contractors charge $X and the insurer's network vendor would charge 70% of $X, the insurer still owes the reasonable local rate.

Contracts and Scope

Before work begins, have a written contract that includes:

• Detailed scope of work (matching the insurance estimate where possible).
• Price — either a fixed price or a clear unit-price structure.
• Timeline for completion.
• How change orders and supplements will be handled.
• Payment schedule tied to completion milestones, not arbitrary dates.
• Warranty on workmanship.

After Disasters: Extra Caution

After a major disaster — wildfire, earthquake, flood — contractors flood the area and demand is extreme. Prices rise, wait times lengthen, and opportunistic operators appear. In this environment: verify every license, get everything in writing, never pay more than 10% upfront (California law caps contractor deposits at $1,000 or 10%, whichever is less), and be wary of anyone who promises immediate availability when everyone else is booked months out. See also Post-Disaster Scams.