The Coalition Against Insurance Fraud warns homeowners that the threat of summer rainstorms, hail, tornadoes, hurricanes and wildfires can not only cause damage to a homeowner’s property, they can also invite the risk of insurance fraud.
After a storm, scammers will try to cheat honest homeowners who need repairs often urgently after a storm, or for routine seasonal fix-ups.
“Most contractors are honest, but far too many are incompetent and unlicensed storm chasers whose best job skill is a wanton desire to bilk homeowners and their insurers. Scams can cost you thousands of dollars, so avoid door-to-door pitchmen,” said James Quiggle, director of communications for the Coalition Against Insurance Fraud.
Homeowners could lose thousands of dollars to contractor scams and have big headaches fixing bad repair work. The coalition warns that homeowners also could face large expenses if their insurance policy doesn’t cover fraudulent repairs.
Contractor inquiries have ranked number one for five straight years by the Better Business Bureau. Contractor-related complaints were ranked 3rd by the Consumer Federation of America for 2010.
The five worst scams:
• Pre-pay. The contractor demands a large cash payment upfront, then disappears after doing little or no work. They also may illicitly require a 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 the deductible. Offering to pay an insurance deductible to obtain work is typically a come-on to lure the homeowner you fraudulent work.
Six ways to fight back:
• Avoid door-to-door contractors. Legitimate contractors normally are too busy to knock on doors.
• Verify license. Contact state and local licensing agencies to ensure the contractor is licensed.
• Contact local Better Business Bureau. Does the contractor have a history of complaints? See if the contractor has a BBB review.
• Work with the insurance company & agent. Don’t let the contractor do the talking. Work directly with the insurer to assess the damage & determine what repairs are covered. Get the right repairs done and done right.
• 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.
• 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.
