Then pay periodically, according to the progress of the work. If the contractor insists on payment for materials up front, then go with him to buy them or pay the supplier yourself. Be sure all work requiring city or county inspection is officially approved in writing before making final payment to the contractor. You may even want a structural engineer to double-check major repairs before you make a final payment. Don't sign over an insurance settlement check to the contractor.
Rules regarding casualty losses are complex.
You may want to work with an advisor such as a Certified Financial Planner licensee, tax accountant, or certified Public Accountant. These experts along with other information sources could help you be aware of changes in tax laws and rules. You must be able to prove that a loss took place, verify its amount, establish that it was due to a specific disaster, and prove that you own the damaged property or are liable for it. Keep in mind that some costs of documenting your loss, such as appraisals or photographs, may be deductible. You cannot take a deduction for property that has been paid for, or is eligible to be paid for, by your insurance Special casualty loss rules apply in a federally declared disaster area.