Bill Insurance Company for Repairs: Contractor Guide

Quick answer: To bill an insurance company for repairs, base your invoice on the adjuster's scope of loss, invoice the property owner (or the insurer if the owner signs a valid direction to pay), show the replacement cost, the deductible the owner pays and insurance payments received, submit supplements for missed items with photos, and send a final invoice to release recoverable depreciation.

Insurance work can keep a roofing, restoration or general contracting business busy for months after a storm. It also brings paperwork most contractors never see on private jobs: adjuster estimates, depreciation holdbacks, mortgage company endorsements and supplements. This guide explains how insurance repair billing works, who pays what, how to structure the invoice, a worked roof example with real numbers and the mistakes that leave contractors unpaid or in legal trouble. It is general information, not legal or insurance advice; rules vary by state and policy.

Who pays the contractor on an insurance claim?

On most property claims there are three or four parties:

• Policyholder (owner): your customer. Your contract is normally with them, and they owe you for the work.
• Insurance company and adjuster: decides what is covered and how much it will pay under the policy.
• Mortgage lender: often named on the policy and on claim checks for the building.
• Contractor: you. You do the work and, unless arranged otherwise, are paid by the owner from the insurance money plus the owner's deductible.

The key point is that the insurer's obligation is to its policyholder, not to you. That is why your contract with the owner must say clearly that the owner is responsible for payment, including the deductible and any amounts the insurer does not cover.

Direction to pay vs assignment of benefits

Arrangement	What it does	Watch out for
Direction to pay (DTP)	Owner instructs the insurer to pay you directly or to add you as a payee; the claim stays the owner's	Some insurers will not honor it; some states scrutinize it closely
Assignment of benefits (AOB)	Owner transfers some claim rights to you, so you deal with the insurer and can pursue payment	Florida bars AOBs under residential and commercial property policies issued on or after January 1, 2023; other states regulate them
Owner pays you	Insurer pays the owner (and lender); owner pays your invoices	You depend on the owner passing money on; use a clear payment schedule and lien rights

Florida's Chief Financial Officer has warned that some "direction to pay" documents used after the AOB ban are effectively prohibited assignments, so Florida contractors should have their forms reviewed by a lawyer. In every state, protect yourself with a written contract and your mechanics lien rights.

Key insurance terms contractors must know

Term	Meaning
Scope of loss	The adjuster's list of damaged items and repairs the insurer agrees to cover
RCV (replacement cost value)	The cost to repair or replace with like kind and quality at today's prices
ACV (actual cash value)	Replacement cost minus depreciation
Recoverable depreciation	Depreciation withheld until repairs are completed, then released under a replacement cost policy
Deductible	The amount the owner pays before insurance; subtracted from the insurer's payment
Supplement	A request to add missed or hidden items to the scope
O&P (overhead and profit)	An allowance for general contractor overhead and profit, commonly requested on multi-trade jobs
Ordinance or law coverage	Coverage for code-required upgrades, if the policy includes it

The Texas Department of Insurance home insurance guide explains replacement cost and actual cash value from the policyholder's side, including why replacement cost claims are often paid in two checks. The NAIC also explains the difference for roof claims after storms.

How to bill an insurance company for repairs step by step

1. Sign a contract with the owner first. State the scope, that the price will follow the approved insurance scope plus agreed supplements and upgrades, and that the owner pays the deductible and any uncovered items.
2. Document the damage. Dated photos, measurements, moisture readings for water losses and notes on the cause and date of loss.
3. Get the adjuster's estimate. Ask the owner to share the full scope of loss with line items, quantities and pricing.
4. Compare your estimate line by line. Many insurers use estimating software such as Xactimate, so matching their line format makes discussions easier.
5. Collect the first payment and deductible. Typically the ACV check (minus deductible) plus the owner's deductible, before or at the start of work. Our guide to deposit invoices shows how to bill it.
6. Submit supplements as you find them. Photos, measurements and code references, sent through the owner or with their authorization.
7. Complete the work and send the final invoice. Show the full replacement cost, approved supplements, payments received and balance due, plus completion photos.
8. Help the owner claim recoverable depreciation. Insurers usually need the final invoice and proof of completion to release it.
9. Provide lien waivers as you are paid. Lenders and owners often require a lien waiver before releasing funds.

Worked example: a storm-damaged roof

A hailstorm damages Jordan's roof. The insurer's scope of loss on a replacement cost policy shows:

Item	Amount
Replacement cost value (RCV) of approved scope	$18,400.00
Less depreciation (recoverable)	-$5,200.00
Actual cash value (ACV)	$13,200.00
Less deductible	-$2,000.00
First insurance payment	$11,200.00

During tear-off, the contractor finds the local code requires ice and water shield at the eaves and drip edge that the original estimate missed. A supplement with photos and the code reference is approved for $1,350.00. The project payments then work out like this:

Payment	From	When	Amount
First insurance check (ACV minus deductible)	Insurer via owner and lender	Start of job	$11,200.00
Deductible	Owner	Start of job	$2,000.00
Approved supplement	Insurer	After approval	$1,350.00
Recoverable depreciation	Insurer	After completion	$5,200.00
Total contract (RCV + supplement)			$19,750.00

The insurer pays $17,750.00 in total ($11,200 + $1,350 + $5,200), and the owner pays the $2,000 deductible. If Jordan also asked for an upgrade to impact-resistant shingles that the policy does not cover, that would be a separate line paid by the owner, agreed in writing through a change order.

The final invoice

Description	Amount
Roof replacement per insurance scope of loss, claim no. [number], date of loss [date]	$18,400.00
Supplement 1: ice and water shield at eaves, drip edge (code required), approved [date]	$1,350.00
Total contract amount	$19,750.00
Less payment received: insurance check no. [number]	-$11,200.00
Less payment received: deductible from owner	-$2,000.00
Less payment received: supplement	-$1,350.00
Balance due (recoverable depreciation)	$5,200.00

Attach completion photos and a certificate of completion if the insurer asks for one. You can lay out an invoice like this in our free invoice generator, listing the claim number in the notes. For trade-specific layouts, see our roofing invoice template and water damage restoration invoice template.

Billing water damage and mitigation claims

Water losses are billed differently from roofs because the work happens in two phases, often with different contracts:

• Emergency mitigation: water extraction, removing wet materials, setting dehumidifiers and air movers, and monitoring until dry. This is usually billed on a separate invoice as soon as drying is complete, with daily moisture logs, equipment counts and photos as support.
• Reconstruction: replacing drywall, flooring, cabinets and paint after the structure is dry. This follows the scope of loss and supplements like any other repair.

Mitigation invoices are commonly questioned on equipment days and quantities, so record each piece of equipment placed and removed by date, room and reading. Keep the drying log and the invoice consistent: if the log shows four air movers for three days in a room, the invoice should not show five for four. Where the owner wants reconstruction done by another contractor, your mitigation invoice still goes to the owner (or to the insurer under a valid direction to pay), and you should be paid for mitigation regardless of who rebuilds.

What should every insurance repair invoice include?

• Your business name, address, license number and contact details.
• The owner's name and property address.
• The insurance company, claim number, policy number if the owner provides it and date of loss.
• Invoice number and date, plus the period of work.
• Line items that follow the scope of loss, with supplements listed and dated separately.
• Owner-paid upgrades or uncovered items on their own lines.
• Every payment received, with check numbers and dates, and the balance due.
• Payment terms, accepted methods and who the payment should come from.
• Any sales tax on materials, where your state requires it; the sales tax calculator can help check it.

How to write a supplement that gets approved

• Be specific: item, quantity, unit and price, ideally in the same format as the adjuster's estimate.
• Prove it: dated photos showing the condition, measurements and, for hidden damage, photos taken as it was uncovered.
• Cite the reason: code requirement (with the code section), manufacturer installation instructions or damage not visible at inspection.
• Send it promptly: before the work is covered up where possible, and ask whether the adjuster wants to re-inspect.
• Keep it factual: explain what the repair requires; leave coverage arguments to the owner or their public adjuster.

Should you wait for insurance before starting work?

Usually yes, at least for the first payment. Starting a large repair before the claim is approved risks doing work the insurer will not pay for and the owner cannot afford. The exception is emergency work to prevent further damage, such as tarping a roof or extracting water, which most policies expect the owner to arrange promptly. Bill emergency services on their own invoice right away, and wait for the approved scope and first payment before ordering materials for the full repair.

Legal lines contractors should not cross

• Do not waive or absorb deductibles. Several states, including Texas, prohibit it, and elsewhere it can be treated as insurance fraud.
• Do not act as a public adjuster. In many states, negotiating a claim for the owner requires a public adjuster license.
• Do not inflate invoices. Bill the actual work at agreed prices. Padding an insurance invoice is fraud.
• Follow your state's rules on contracts after disasters. Some states have cancellation rights and restrictions for storm-related contracts.
• Use compliant AOB or DTP forms. Especially in Florida, where AOBs are barred for newer policies.

Common billing mistakes on insurance jobs

• Starting work without a signed contract with the owner. The insurer is not your customer.
• Invoicing only the ACV. Your contract price is usually the full replacement cost plus supplements.
• Forgetting the deductible. Collect it as you would any other payment.
• No claim number or date of loss on invoices. Insurers and lenders need both to process payments.
• Late final invoice. Recoverable depreciation often has a deadline in the policy.
• Not planning for lender delays. Mortgage companies may hold funds and release them after inspections, so build that into your progress billing schedule.
• Mixing upgrades into the insurance scope. Bill owner-paid upgrades separately so the insurer is not charged for them.

How to protect your cash flow on insurance work

Insurance jobs pay well but slowly. Collect the first insurance check and deductible at the start, order materials only after funds arrive, and invoice the moment work is complete. Keep a claim file per job: contract, scope of loss, supplements, photos, invoices, lien waivers and copies of checks. If an owner keeps insurance money without paying you, your lien rights and contract are your main tools; see our construction invoice guide and the contractor invoice template for clear payment terms.

Billing insurance repairs correctly comes down to matching the adjuster's scope, documenting every change and showing every payment on a clear final invoice. Build that invoice with our free invoice generator: it is free, needs no sign-up and downloads a PDF in your browser that you can send to the owner, the adjuster and the mortgage company.