Do I have to replace my roof with the insurance money?

If you own the home outright

Many policies pay the actual cash value whether or not you repair. You can generally keep that payment, but you give up any recoverable depreciation, and the unrepaired damage stays on the insurer's record.

If you have a mortgage

Lenders have a financial interest in the property and are usually named on the insurance check. Many require proof of repairs, an inspection, or a staged release of funds; see mortgage company insurance checks.

Consequences of not repairing

• Lost depreciation: replacement cost policies pay the held-back amount only after the work is done; see recoverable depreciation.
• Future claims: if a later storm hits the same unrepaired roof, the insurer can deduct or deny damage it already paid for.
• Renewal: an underwriting inspection that finds a damaged roof can lead to required repairs or nonrenewal.
• Leaks: damaged shingles let water in over time, and long-term leaks are generally not covered.
• Selling: a buyer's inspector will find the damage, and seller disclosure forms typically ask about known roof problems.

Spending it differently

Using the money for something else while carrying a mortgage can violate your loan terms, and misrepresenting repairs is fraud. If you choose an upgraded material, the insurer still pays based on like kind and quality, and you cover the difference.

A middle path

If the damage is minor, ask your insurer and lender how they want it handled before cashing anything, and get the answers in writing.