A cash settlement can give you control over who repairs your home, but it also shifts responsibility for organising and paying for the work to you. Before accepting a full or partial cash settlement, make sure the offer is based on a complete scope and realistic repair costs.
What is a cash settlement?
Your insurer may offer a cash amount for all or part of an accepted home insurance claim rather than arranging the relevant repairs. You may also request a cash settlement. Whether it is available and how much is offered depends on your policy and claim circumstances.
Seven checks before you accept
- Read the PDS and settlement offer: Understand exactly what the insurer is agreeing to pay for.
- Check the scope: Look for missing damage, access requirements, demolition, reinstatement, waterproofing and finishes.
- Get an independent quote: Preferred supplier pricing may not match what you will pay a builder directly.
- Allow for unknowns: Concealed damage may not be evident until opening up walls, floors or roofs.
- Check compliance: Confirm whether permits, engineering, certificates or regulatory upgrades are necessary.
- Understand the risk: If the settlement falls short, you may have to pay the difference unless further amounts are agreed.
- Ask about review rights: Seek a written explanation, any applicable Cash Settlement Fact Sheet and information about reconsideration or complaints.
Insurer-managed repairs compared with cash
Insurer-managed repairs generally leave the insurer responsible for coordinating the repairer and managing the authorised work. A cash settlement gives you more flexibility over the builder and timing, but you usually become responsible for managing the work, compliance and budget.
What if the settlement seems too low?
Ask the insurer for an itemised explanation and provide a detailed independent scope or quotation identifying omissions. If you cannot resolve a disagreement, use the insurer's internal dispute resolution process and consider AFCA where eligible. Do not feel pressured to accept an offer before understanding the consequences.
How Brownlow can assist
Brownlow Building can inspect relevant damage, identify repair requirements and prepare a detailed quotation for building works. An independent quotation helps you compare the insurer's scope with the actual work required; it does not guarantee a particular settlement outcome.
For independent consumer guidance, read ASIC MoneySmart's home insurance cash settlement guide and the Insurance Council of Australia's cash settlement information.
This guide concerns property damage under a home insurance policy, not Victoria's separate Home Warranty or older DBI schemes. It is general information, not legal or financial advice.
Insurance repairs and independent scopes