Cash Settlements for Home and Contents, Strata and Landlord Claims

What is a cash settlement?

For your home and contents insurance, a cash settlement is when your insurer pays you a sum of money instead of arranging repairs or replacements. This applies to both building and contents claims. 

You might be offered:

• A cash amount to repair or rebuild your home
• A cash payment to replace damaged contents
• A reimbursement for accommodation or emergency expenses

Cash settlements could give you the freedom to manage your own repair work, hire your own builders or trades, and potentially use the funds in a way that better suits your needs. But they also come with responsibility, and you may lose certain protections offered under insurer-managed repairs.

Why is my insurer offering me a cash settlement?

Insurers may offer a cash settlement when:

• Repairs are delayed or not possible
• Their suppliers refuse to provide a warranty on repairs
• There are supply or trade shortages
• You’ve challenged the proposed repair method or scope
• The relationship between you and the insurer or builder has broken down
• The offer is a ‘without prejudice’ settlement offer, meaning it is not an admission of liability, just an attempt to resolve the claim.

Can I ask for a cash settlement instead of repairs?

You could. While most policies give the insurer discretion to choose how to settle a claim (repair, replace, or pay cash), you can request a cash settlement, and many insurers are open to it.

Reasons you might want a cash settlement include:

• You don’t trust the insurer’s builder or trades
• You want to complete works with someone you know
• You want more time to plan renovations
• You intend to sell or relocate

However, if the insurer has the ability to complete the repairs using its own suppliers, then under most policies, they are generally entitled to cash settle the claim based on what it would have paid those suppliers, not what it would cost you privately. If your own quotes are more expensive, you may have to cover the difference, unless you can show that the insurer’s supplier quote is not actionable. 

What are the risks of accepting a cash settlement?

Cash settlements can give you control, but also come with trade-offs. This includes: 

• No insurer guarantee or workmanship warranty
• May not cover unforeseen damage or delays
• If the funds run out, you could be responsible for the shortfall if you cannot negotiate further settlements

Before accepting, you should assess whether the cash amount truly reflects the cost to repair or replace the damage properly.

Can I get a cash settlement for contents as well?

Yes. Contents claims (for damaged furniture, appliances, electronics, etc.) are commonly settled in cash. However, make sure to check you’re being offered current retail value for your items, as most policies replace contents new-for-old. 

What if I accepted an inadequate offer?

If you’ve already accepted a cash settlement but later discover that the damage was worse than expected, or that the amount was insufficient, you may be able to go back to your insurer and request additional payment (so long as you haven’t signed a Deed of Release). 

Insurers will usually ask for further evidence to justify your request. This may include:

• New reports or quotes from qualified trades or builders
• Photographs showing previously hidden damage
• An updated assessment from one of the insurer’s own suppliers

Be prepared for the insurer to reassess the situation before agreeing to any further payment.