The Insurance Company Is Holding Up The Job. Now What?

Editor’s Note: This is the sixth installment in an eight-part series of posts by Bill Gschwind, business and construction attorney and founder of Minnesota Construction Law Services. Bill brings years of experience helping contractors get paid without wasting time, leverage, or sanity.

If you do storm restoration work, you already know the biggest delays aren’t in labor or materials – they’re in payment. More specifically, insurance payments.

And that’s where many contractors get stuck.

They do the work. The customer signs off. But the check doesn’t come. So, the contractor ends up chasing the insurer, calling the adjuster, and trying to “help” the customer get the money released.

Here’s the hard truth: that’s not your job.

Your Contract Is with the Owner — Not the Insurer

This is where many restoration contractors go off course. They treat the insurance company like the actual payer.

But legally, the only party who owes you money is the property owner.

The contract is between you and them. If their insurance company fails to pay—or changes its mind after the job is done—that’s their problem, not yours.

You still expect full payment. You are not financing the work.

And the longer the customer thinks you are responsible for chasing down insurance money, the more passive they become. Why bother fighting the insurer when you’re already on the hook?

Don’t Let the Money Get Away

Let’s talk about ACV and depreciation.

Most insurance jobs include:

• An ACV (actual cash value) payment up front
• A second check for depreciation after the job is substantially complete

That means your customer should already have money in hand before you lift a hammer.

So why are you floating material costs? Why are you doing work without a deposit?

At MNCLS, we advise our contractor clients to:

• Collect a small deposit at signing (to show commitment)
• Collect again when materials are delivered (to cover costs)
• Collect the rest upon substantial completion

All of that should come from the ACV money.

If there’s ACV left over when the job ends, it should be paid immediately. Don’t let that portion age out while the customer waits on the second check.

What About Mortgage Companies?

We hear it all the time: “The mortgage company’s holding the check.”

In our experience, mortgage companies rarely hold up payments without a reason. The two most common are:

1. The owner didn’t submit the paperwork properly
2. The owner is behind on their mortgage

In the second case, the lender may use the insurance money to bring the loan current—leaving your invoice unpaid.

Again, this is the homeowner’s problem to solve. Your job is to build the project, not to fix their banking situation.

Stay on Top of Collections

If the depreciation check is delayed, or the ACV funds haven’t been paid out, don’t wait six months hoping it’ll work itself out.

Lien deadlines still apply. So does your right to escalate.

When unpaid insurance jobs sit on the books too long, it’s often because the contractor assumes “the money is coming.” But if it’s been 60–75 days and nothing’s moving, there’s a good chance:

• The customer has already spent the money
• The insurance payment came but was diverted
• The customer is unhappy and using the money as leverage

Whatever the case, it’s time to act.

Build the Right Expectation Up Front

Most people only experience insurance claims through health care or auto repairs—where the provider handles the paperwork.

But construction doesn’t work that way.

You need to explain early and often:

• You work for the homeowner
• The homeowner is responsible for paying your invoice
• You will cooperate with the insurer—but you won’t chase their money

That’s their job.

Final Thought

Insurance-paid work creates unique challenges, but those challenges are manageable when you stay in your lane.

At MNCLS, we help restoration contractors write better contracts, set better payment schedules, and enforce their rights professionally.

Let us help you build a process that keeps the pressure where it belongs—without stepping into dangerous territory.

Coming Up Next:

Should I Write Off This Debt?

Not every unpaid invoice needs a lawsuit. But too many contractors are holding on to bad debt that’s doing more damage than they realize.

We’ll show you how to decide when it’s time to let go—and when to fight.