I have renter’s insurance and the house was recently damaged. The carrier is very helpful and has presented payment to cover the repairs. My question is: May I use the payment to make desired alterations or am I bound by their repair estimate. In other words, can I tear down a wall or add a room, etc.?
Without detail, I can only give you general information.
Generally, you can use the money for whatever you like. If it was an Actual Cash Value payment (replacement cost minus depreciation), then you may still be entitled to the depreciation once you replace what was lost. You would then need to prove to the insurer that you replaced what was damaged in order to recover the depreciation. That is the main reason you would want to replace what was lost so you can prove that replacement to the carrier and recover the depreciation. If that is not a concern, then you can keep the money and/or spend it on whatever you want.
It would be very unusual for a tenant to be tearing down walls or add rooms to a rented unit. You Should talk to your landlord before you tear down walls or add units. You should also talk to engineers so you are not tearing down load-bearing walls without permits. If the landlord recovered money for the loss to walls and such, then the landlord should pay for those repairs. Renters usually are paid only on loss of personal property not for damage to walls.
Again, without more information on the loss, the damage and the payment by the insurance company, this general information is the best I can provide you.