The "Right to Repair" Clause: What Every Homeowner Needs to Know

What is the "Right to Repair" Clause?

The "Right to Repair" or "managed repair" clause in a homeowner's insurance policy gives the insurance company the power to choose the contractor and manage the repairs for a covered loss. Instead of providing a cash settlement, the insurer directly hires and pays a contractor to fix your home. Many homeowners are unaware of this clause until they file a claim, only to discover they have lost control over a major repair.

For example, after Hurricane Ian, one homeowner discovered this clause in their policy. Although the insurance provider had its own construction company, the distance and extent of the damage ultimately led them to waive the clause, allowing the homeowner to choose their own repair companies [Reference]. This fortunate outcome is not guaranteed for every policyholder.

Key Aspects and Implications for Homeowners

Loss of Control

With a "Right to Repair" clause, you may have limited influence over the repair process. The insurer, not you, selects the contractor, and that contractor works for the insurance company, not for you. This removes your ability to select a contractor based on your own research, reputation, or personal preference.

Potential for Substandard Repairs

Since the insurance company's primary objective is to increase profits, it may choose contractors who agree to perform repairs at a lower cost. This can lead to issues with the quality of the work, contractors cutting corners, or using substandard materials to meet the insurer's budget constraints.

Increased Risk and Disputes

If you are unhappy with the repairs, disputes can arise. If the insurance company invokes the clause, the policy effectively becomes a construction contract, which can introduce legal complexities. While this can make the insurer legally responsible for the repair quality, it can often require litigation to resolve, which is both time-consuming and expensive for the homeowner.

What You Can Do

The first step is to check your policy to see if a "Right to Repair" clause is present. If it is, you may want to shop for another carrier that does not include this clause. Many industry professionals and legal experts view this clause with skepticism and advise homeowners to be cautious.

Pro Tip: If you're buying a new home or switching insurers, ensure you ask about this clause. Your long-term peace of mind and financial security could depend on it.