Money from homeowners insurance?

I just got the money from my insurance claim for replacing the roof.  Should I put this money into To be Budgeted?  It makes my income seem a higher then it is, plus I'm going to immediately use it to fund my "Maint, Repairs" category.  So I was thinking of skipping "To be Budgeted" Is it better for all income to go through "To be Budgeted"?

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  • If insurance has paid you $X, presumably this was to cover a quote for said roof repairs that was also $X. 

    I would categorise the inflow into the same category the roof repair costs came out of.

    I find it weird they paid you directly instead of paying the contractor. Maybe it works differently in the US (took a guess at the country because you use the term homeowners insurance)?

    If this is some other scenario where they give you $X but you only had to spend $y and there's some extra money then i would do a split transaction. cover $y as an inflow to that category and the rest is an inflow as TBB. yes is makes your income seem high but you have to remember that it is truly increasing your available money. If you were to inflow it directly into the "Maint, Repairs" category then you are going to see the impact of that in the future when it says your average spending is less than it actually was.

    Like 1
      • Green Leaf
      • tangerine_dream
      • 5 mths ago
      • Reported - view

      SgtBatten Good guess - I am from the US.

      Actually I didn't have to pay for the repairs out of pocket.

      Maybe its because there are a lot of roof replacements here - don't know how it works elsewhere in the US.  I don't live in a place with extreme weather, but hail and 50-80 mph winds are not usual.  The specs for a new roof have improved a lot, but even a new one will be seriously damaged in a really bad storm.

      So there's a lot of customers, and most them are not going to pay up front cash for a new roof at $10K - $15K if they can help it.  They would be more likely to wait until their houses were leaking badly and then get the cheapest roof possible - and that just drives up the overall cost.  So the roofing companies are expected to repair when  the insurance company accepts the claim, and then send a bill.

      Thanks for explaining different options so clearly.  I think my biggest concern is knowing my cost of home repair, so I should bring the money in as income.

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      • Annieland
      • I was told there would be no math.
      • Annieland
      • 5 mths ago
      • Reported - view

      SgtBatten Thankfully I've never been in this situation, and I'm all for reimbursing most stuff straight to a category.  But I can see at some point wanting to easily see the record of what those repairs cost in a report.  I categorize medical reimbursements straight back to the category, but I also keep a total of all medical expenses out of YNAB whether we pay them or insurance does.

      So In this case, I think there's a strong argument for not treating this one as a more routine reimbursement (business, travel, medical, etc.).  

      Green Leaf I have a category group called "Savings" and it's just for categories that are for some general financial purpose.  Whether income replacement, taxes, buffers, temporary holding, and one I had one for "Refinance." It was a one-off.  My suggestion is to make a category for Insurance Reimbursement and put all the money in there.  If you do it through TBB you'll be able to always see the amount you received in the reports.  If you DON'T care about that, then just categorize direct to the category and it's there.

      Now as you pay for your repairs you can cover the expenses from that Reimbursement category into a regular Repairs category.  And when this nightmare is finally over, just hide or delete the Reimbursement category.  This is much how I treat my medical expenses, only kind of in the reverse as I'm covering with my own medical buffer before the reimbursement or HSA withdrawal comes in.

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      • SgtBatten
      • "YNAB broke" since 2013
      • SgtBatten
      • 5 mths ago
      • Reported - view

      Green Leaf Maybe I am misunderstanding the entire thing. 

      If you didn't have to pay anything, why are you getting money from the insurance company?

      I made an assumption this was an insurance claim due to damage from unexpected events. In Australia you would call the insurance company and make the claim and they would sort the rest out. Nothing would show up in YNAB at all as everything would be handled externally from my budget by the insurance company. 

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  • Hello, Green Leaf

    I'd like to offer a dissenting opinion on how to treat insurance disbursements.  I used to inflow insurance payments directly to the related category, but now I prefer to inflow insurance claim payments as inflow: TBB.

    I still categorize some inflows direct to category, but I reserve the inflow direct to category for the Rs: rebates, returns, reimbursements, and refunds (and occasionally for pass-throughs that aren't my funds, such as when one sibling sends me an e-transfer to use to pay another sibling's rent, which I tend to view as the reimbursement before the expense)

    I want my reports to show me how much I actually spent on those expenses that are eligible for insurance claims -- such as home repair, medical and dental expenses, car repairs -- and I also want to see how much I received from the insurance policy/claim as a separate line item.

    When I used to inflow directly to the medical category, the specific example that caused me to change my method, it resulted in a number that is net spent. I grew uneasy because net spent gave me a false sense of how much I need to plan for in retirement or if a change of employment to an employer who provides different benefits could leave me unprepared. (I'm in Canada, and our mix of publicly funded vs employer-provided or privately-purchase supplemental  insurance can really obfuscate the true costs.) Also, medical/dental expenses can be tax deductible if it reaches a certain percentage of taxable income over any consecutive 12-month period, and being able to see how much that is in the reports is kind of helpful. As I near retirement, I also want a realistic sense of the expenses before insurance payments, so separating the outflows from the inflows really helps to provide the raw numbers. It will enable me to assess and choose the supplemental plan coverage I'll need in retirement.

    After I made the change to inflow: TBB, I was actually shocked when I saw the total I was spending on wellness, health, medical, and dental.

    Like 2
      • Annieland
      • I was told there would be no math.
      • Annieland
      • 5 mths ago
      • 1
      • Reported - view

      HappyDance I agree.  That's exactly why I mentioned I do keep total incurred medical expenses in a separate record outside of YNAB.  It's very important and more people should do it.  It makes it very handy to estimate costs and insurance needs going forward  each year.  I just don't do it for LPFSA stuff, because all I have to do is take my out-of-pocket and add $2700 to it and there ya go :).  But that too is all tracked in a separate program I use.

      Like 1
      • MadDog
      • Navy_Blue_Pegasus.2
      • 5 mths ago
      • 1
      • Reported - view

      HappyDance I am in Canada too and I do the same thing for my health reimbursements. I cover in my budget and then submit. It also gives me a better idea of how much it costs us, how much is reimbursed and then the actual net. 

      We also do it with our RESP for the two youngest. We expense all of the outlay to the "Child" category and the inflow from the RESP to TBB. It gives us an idea of how much a child costs us, even on a temporary cashflow basis. If it all went to the category, we would not have an idea of the average cost per child that we may need to consider.

      Like 1
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 5 mths ago
      • 1
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      MadDog 

      Ah. Great minds Canadians think alike. 🙂

      Like 1
      • SgtBatten
      • "YNAB broke" since 2013
      • SgtBatten
      • 5 mths ago
      • Reported - view

      HappyDance MadDog Annieland

      I can understand the logic you are putting forward however in my opinion it is somewhat irrelevant. If you had the same or similar medical expenses each year you would get the same reimbursements so your budget outflow would be the same. 

      Home repairs and car repairs that are related to an insurance claim are not typical events and are paid by the insurance to the provider are they not? Nothing should show in YNAB for those. Medical and dental I understand as normally insurance doesn't cover 100%. 

      I can understand having a buffer in the category to cover the outflow initially while awaiting the refund if necessary. Here the refunds are paid on the same day or private insurance pays the provider directly on the spot through the national system which is automated. 

       

      Actually I just read  HappyDance response again and can see a significant difference. Your health insurance is tied to employment. that sucks, seems to be a very poor situation in the US every time I hear about it, didn't realise Canada had it also. My medical insurance wouldn't change in retirement as it is a separate product anyone can purchase. In fact i think it becomes cheaper with better rebates.
       

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      • MadDog
      • Navy_Blue_Pegasus.2
      • 5 mths ago
      • Reported - view

      HappyDance Most definitely. 😄

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      • MadDog
      • Navy_Blue_Pegasus.2
      • 5 mths ago
      • Reported - view

      SgtBatten Our medical insurance is for items that are not covered by basic health care which is free to all. So, my plan covers physio, chiro, massage, glasses etc. Some of these expenses may be covered by public health plans depending on the province or personal situation. For example, my son is on a program called Assured Income for the Severely Handicapped. His medical is covered by the program. Our health care plans are quite reasonably priced. I can get a plan through my employer or on my own. We are not paying hundreds of dollars per month. 

      We definitely are not like the US. I think we are more similar to Britain with the NHS except each province runs their own version of it. They are all similar. 

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