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Good morning. One, I would not necessarily settle for the $46,100 the insurance company has offered. Insurance companies tend to low-ball these offers and if you contest this, it's likely they will offer you more money than their initial offer on this. Why is that? Because the insurance company doesn't simply get the unilateral right to arbitrarily establish the settlement amount because they are not exactly an unbiased party. Write the insurance company a certified, return receipt requested letter explaining that you don't consider this to be a fair and reasonable settlement and demand that they agree to a higher amount within a short specified period of time or you will have no choice but to file a claim against them. Be sure to mention you intend to file this claim as not only a breach of contract claim, but also as a failure to reasonably settle, which will entitle you not only to actual damages
, but an additional amount equal to multiple times your actual damages as punitive damages. This is typically all you need do, because insurance companies want to avoid punitive damages and the bad publicity that comes with failing to settle. Two, no matter what settlement amount upon which you ultimately settle, this is to compensate you for your damages. You are under no legal obligation to spend the money on reconstruction. You can apply all the proceeds to your mortgage and then pay out the balance over time.
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