After a major disaster homeowners are likely to be approached with contractors offering help, with some of them looking to take advantage of the situation.
Homeowners must be alert to storm-chasing contractors who try to exploit the confusion after Hurricane Sandy by making shoddy repairs or stealing down payments, according to the Coalition Against Insurance Fraud.
The coalition indicated that while most contractors are honest, shady contractors typically descend on disaster areas such as those caused by Sandy.
Usually the contractors go door-to-door seeking business. They’re often incompetent, unlicensed and are poised to cheat anxious homeowners who urgently need repairs after the storm. The coalition warns that even local contractors might also be dishonest.
Homeowners could lose thousands of dollars to contractor scams. Shoddy repairs also can take months to correct, making it harder for homeowners to put their lives back together again.
Contractor inquiries have ranked number one for five straight years by the Better Business Bureau. Contractor-related complaints were ranked third by the Consumer Federation of America in 2011.
Complaints about home-improvement contractors in New Jersey were the number one source of consumer complaints, according to the state Division of Consumer Affairs.
Here are five common scams for a storm-damaged area:
Pre-pay. The contractor demands a large cash payment upfront, then disappears after doing little or no work. They also may illicitly require the homeowner to pay for bids.
Shoddy work. The work is low quality, using cheap materials. Homeowners may have to redo the entire job, often at their expense.
Phantom damage. A contractor creates storm damage. Nicking undamaged sidewall or roof shingles with a screwdriver to mimic hail damage is one come-on.
Inflated damage. Contractors may enlarge holes in a roof to increase their billings. Simply inflating the bill to include more work than was done is another ruse.
Pay your deductible. Offering to pay your insurance deductible to get your business typically is a come-on to lure you for fraudulent work.
Six ways to prevent fraud:
Avoid door-to-door contractors. Using them is risking a world of trouble. Legitimate contractors normally are too busy to knock on doors.
Verify license. Contact the state and local licensing agencies to ensure the contractor is licensed.
Work with your insurance company & agent. Don’t let the contractor do the talking. Work closely with your insurer throughout the claim process to assess the damage, determine what repairs are covered, and the cost. Get the right repairs done, and done right.
Watch for red flags. No business cards or referrals…P.O. Box instead of a street address…van looks rundown and has no company name…poor personal appearance…can’t show proof of workers compensation insurance or surety/performance bond.
Insist on a contract. Have a signed contract specifying exactly what work will be done, plus the price and repair schedule. Never sign a contract with blanks.
Contact local Better Business Bureau. Does the contractor have a history of complaints? See if the contractor has a BBB review
