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  • Writer's pictureDavid Manes

Can I Sue A Contractor For Breach Of Contract After I Receive The Insurance Check?

The relationship between contractor and home owner is a difficult one since disagreements and problems can occur easily. After all, the government established the Home Improvement Consumer Protection Act (HICPA) to offer further protection to home owners who have experienced contractor fraud. The law handles the breach of contract in a couple of ways, depending on case by case situations.

A home owner should consider a couple factors when trying to figure out whether it’s worth the time to file a lawsuit against a contractor for backing out of a contract.

  1. Was a written contract signed?

  2. Has work already begun on the home?

  3. Did the home owner already pay, either a deposit or full sum?

Since lawsuits are often based on the damages that a victim has experienced, a situation that has not caused any damages to a home owner either financially or physically in the home might not be worth pursuing. However, if a contract backs out mid-job, this situation would prove damaging and therefore adequate for filing a lawsuit.

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Paying Options For The Contractor

Contractor holding hard hat

When you are having home improvements or repairs made on your home, how the contractor is paid depends upon you and your insurance company. In some situations, an insurance company will directly pay contractors. But, the insurance check can come to the home owner, and then it’s the responsibility of the home owner to pay the contractor.

Paying Contractors Through The Insurance Company

Some home owners prefer that the insurance company directly pays the contractor for home repairs. To do so, the contractor may need you to grant permission for payment through the insurance company. You will also need to receive permission from the insurance company to have them pay the contractor. When the home repair is complete, check the work to ensure total satisfaction before having the insurance company pay them.

Homeowners Paying The Contractor

When the homeowner receives the claim check from the insurance company, the homeowner is responsible to pay the contractor. Also, an insurance company will assess the home repair under its policy and determine what it covers. Therefore, be sure to check your policy for other payment provisions.

What Do I Do When A Contractor Breaks A Contract?

When a contract is broken, the law terms it as a breach of contract. More seriously, a breach of contract is a failure to satisfy a contract without a good reason. Broken contracts fall into a couple of different categories.

Material Breach

The failure to hold up your part of the contract, whether doing the work or paying the worker, is a material breach. It is one of the most serious breaches. Injured parties can seek damages in court.

Fundamental Breach


Also known as a repudiatory breach, this type of breach of a contract is so fundamental that it allows the grieved party to stop the performance of the contract while suing for damages.

Anticipatory Breach

When one side of the contract recognizes that there is no way that the other side can hold up their end of the agreement, this is considered an anticipatory breach. If a contractor signed to complete house work by December 1 but hasn’t started fifteen days before the date, the home owner could sue for anticipatory breach of contract.

Minor Breach

As assumed, a minor breach is only a small break in contract. When a contract is mostly completed on time but a few errors or problems exist, those issues could be considered a minor breach. At this point, the client could force the contractor to correct the lingering problems.

What Do I need For A Lawsuit Against My Contractor?

To prove that you have a viable case for a lawsuit against a contractor, you need to establish a couple of items. The process starts with the contract and builds off of the existence of damages. You also need to know what your rights are under the law.

A contract existed.

The best case scenario means that you have a written copy of the contract. If the contract was verbal or implied, it’ll be more difficult to prove but not impossible.

The contract was broken.

You must be able to clearly show that the contract was broken. Whether work was not completed or done incorrectly, the contract must back up your belief that it has been breached.

Contractor Fraud: Let Us Help You Fight

You lost money.

The breach of contract caused you to suffer financially, maybe requiring you to hire another contractor to complete the work.

It’s the contractor’s fault.

If the contractor had only upheld their part of the contract, none of this would have happened. The contractor’s negligence caused you to suffer monumental damages to property and finances.

Seek remedy.

For breaches of contract, the law offers a variety of remedies for the damages that you have suffered. While most desire to just receive the money they lost, other remedies might better fit your situation. As always, remember that a good attorney can help you make an educated decision on the best remedies.

  1. compensatory damages – financial reimbursement of losses

  2. consequential and incidental damages – reimbursement for special damages incurred

  3. liquidated damages – damages agreed upon in the contract

  4. punitive damages – money awarded as retribution

  5. attorney’s fees – cost of the attorney covered by damage recovery

Special Remedies for Breach of Contract

  1. specific performance – court order binding the contractor to initial contract

  2. rescission – the contract is canceled and forgotten

  3. reformation – the original contract is rewritten to reflect the reality of the project

Side Note on Breach of Contract: Often the remedies can be found in the contract. In fact, analyze the contract or hire a lawyer to comb through the contract to look for already available remedies.

5 Ways to Protect Your Contract and Property

When you suspect that your contractor might be in danger of breaching your contract, it’s important that you’ve taken certain steps to protect your property. Taking these steps will help you prove that a breach did occur and that it proved damaging for you. Sweating the details is crucial.

1. Research the contractor

suited man holding notebook paper asking, "Need a lawyer?"

Check into the contractor’s background. Read their reviews and do internet searches to be sure that they haven’t been sued for negligence, incomplete work, or fraud. Do your homework before trusting a contractor with your home or business.

2. Get everything in writing

No detail is too small to put in the contract if it’s important to you. Don’t rely on an implied understanding or verbal agreement. Put it in the contract.

3. Create a timeline

Fill a folder with all the paperwork for the project. Make copies of the original receipts or checks if you aren’t keeping them. Also, keep track of dates of interactions and work on the project.

4. Take photos

Snap photos before, during, and after work has been done. It’s not crazy, nor is it obsessive. Memories fade and alter while photos remain a clear reminder of good or poor work.

5. Ask the general contractor to sign lien waivers.

Also request that the general contractor has all suppliers and subcontractors sign these waivers as well. These waivers can state that the supplies have been paid for and that the contractors will not place a future lien on the homeowner’s property. Once the waivers have been signed, make the final payment.

If you need a legal professional to look over a contract or explore your legal options for breach of contract, contact a lawyer.

Don’t hesitate, talk to an attorney: (412) 626-5626 or

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