Curious as to how you would record receipt of insurance claim proceeds ahead of the actual costs to repair? As a reduction in that cost line item which will get offset by the costs?
That’s what I would do (and have done).
The way I prefer to handle this is actually to create two expense categories called something like “Insurance claim 2024 water leak expenses” and “Insurance claim 2024 water leak proceeds”. I would likely also make them a dedicated group of their own. This naming convention ensures that alphabetically your two categories will be sequential and therefore grouped together in any reporting that you do. Importantly, note that I put them both as expenses even though one is expense and one is income, but this is because I want to understand what is the net impact on my expenses. Having them fall sequentially, I can easily do a sum of the total of both categories (or reference it immediately as the group total) to know the net impact on my expenses. But by splitting them into two categories instead of having them offset each other in one category used for both expenses and proceeds, I can better track where I am in terms of how much the project cost overall and how much the insurance company paid me. This way I can quickly understand these costs from three different angles (total cost, total proceeds, and net impact on my expenses).
1 Like
Fwiw, I use tags to distinguish within the category. So, the insurance proceeds get an Insurance Payment tag. That way, I use the category to easily get a net balance, and I can use the tags to distinguish the expense from the insurance payment.
1 Like
Hi, @bltcfo:
Our family home was gutted by fire in 2018, kicking off an insurance claim that was open for 2 years (the statutory limit), and reconstruction that continued for several months beyond that.
The entirety of record-keeping in Tiller related to this experience was managed using two categories: Settlements, and Reconstruction, added to a group named Insurance Claim that contained both categories and no others. Only claim-related transactions referenced these categories.
All disbursements from our insurer relating to our claim were categorized as Settlements, in positive amounts. Some of these were in check form, and appeared as deposits to our bank account.
Other disbursement were either wholly or partially paid directly by the insurance company to vendors who provided services related to the claim, like dry-cleaning, moving and storage, etc. In these cases, I split transactions to reflect all these disbursements. Here’s an example:
Insurer makes a partial settlement on the claim of $3000.
$1000 of the $3000 payment is paid directly to me in the form of a check, which I deposit.
$1000 is paid to Sal’s Clothing Restoration, for services covered under our policy.
$1000 is paid to Gentle Giant Movers, for services covered under our policy.
When the $1000 direct payment lands in Tiller, I edit the Description to show the Insurance Company as the payor. I change the amount to $3000 to reflect the total value of that partial settlement payment, and split the transaction into three. The two additional transactions are negative amounts, with Sal’s and Gentle Giant in the respective Description fields. All are categorized as Settlements.
As a result, a summary of the Settlements category at any point while the claim was open showed the total dollar value of payments from the insurance company as a positive dollar value, and the sum of payments made to each vendor who was paid directly for services related to the claim, in negative dollar values.
While my bank did not actually handle the money that went directly from the insurance company to the vendors, this accounting method never conflicted with my day-to-day financial management. It did effectively record the source and destination of every Settlement dollar paid out in the claim, with accurate subtotals in each case. Account balances in Tiller, while temporarily inaccurate, remained consistent with bank records in the long term.
The total Settlement dollars received from the Insurance Company, minus the total Settlement dollars paid to vendors servicing the claim, represented the cash in hand that we could allocate to Reconstruction. All of this was possible while using our day-to-day bank accounts, credit cards, etc.
To document the Settlements received in greater detail, I used the Tags field to reflect which of policy coverage areas was the source for any settlement amount. There were three in our case: Dwelling; Personal Property; Loss of Use. Each area had a policy limit, which I was able to monitor against the actual disbursements in that coverage area.
All expenses related to the restoration of our home were categorized as Reconstruction. All these bills were paid directly by us to the builders and suppliers who worked on reconstruction, from our usual checking accounts, credit cards, etc. This category required no additional special treatment to meet our needs.
This approach allowed us to monitor the current status of the insurance claim and the reconstruction project individually at any point. I could not exaggerate how valuable this data was in surviving this experience with our finances and our mental health intact.
In fact, I only discovered Tiller a few months after the fire. I got all my accounts connected, and backfilled a few years of transactions from Quicken.com. Among so many other things, this enabled me to easily document expenses like my typical energy costs prior to the fire. As a result, I was able to claim losses that might have been otherwise been overlooked.
It’s fair to say that the whole experience would have been immensely more traumatic, and costly, had I not discovered Tiller.
I hope some of this is useful. Best wishes!
4 Likes
Wow. Very sorry for your loss, @GregC, but grateful for you sharing how Tiller helped you manage it. Thankfully, my insurance reimbursements have been limited to things like windshield replacements at this point so I haven’t needed to think through such an elaborate system, but your story illustrates what a powerful tool Tiller can be that hopefully reduces additional stress in what must be an unbelievably traumatic and stressful experience. Be well.
1 Like
Thanks all - these all give me food for thought!
1 Like