By Mike Moser
Disasters have a way of bringing out the best in people, but the worst in others who prey on people trying to recover after the storm.
Homeowners should be aware of this and watch out for unscrupulous contractors looking to take advantage of them, according to the Insurance Information Institute.
After a disaster, professionals often go door-to-door to offer their services in neighborhoods that have sustained damage. While many of these business people are reputable, some are not.
For the many homeowners who are victims of contractor fraud, it can force delays in rebuilding or even completely halt the rebuilding process after a catastrophe.
The I.I.I. offers these tips to help homeowners avoid being defrauded in the wake of Hurricane Sandy:
• If a contractor comes to offer services, ask to see the salesperson’s drivers license and write down his or her license number and the vehicle’s license plate number.
• Investigate the track record of any roofer, builder or contractor you are considering hiring. Look for professionals who have a solid reputation in your community. Use a local, licensed, bonded and insured contractor. Contact the local Better Business Bureau for help. Also, get references and never give anyone a deposit until after you have thoroughly researched their background.
• Ask to see any contractor’s proof of liability and workers compensation insurance.
• Occasionally, even licensed contractors develop financial difficulties, have employee or credit problems, or fail to keep their license current. Contact a local contractor license board before signing any contract or advancing any large payments for work.
• Homeowners who don’t know of any reputable contractors should ask an insurance professional for a list.
• Do not be rushed into signing a contract with any company. Instead, collect business cards and get more than one written estimate for the proposed job. Get everything in writing including cost, work to be done, time schedules, guarantees, payment schedules and other expectations that should be detailed.
• Never sign a contract containing blanks; unacceptable terms might be added later.
• Beware of building contractors that encourage you to spend a lot of money on temporary repairs. Payments for temporary repairs are covered as part of your total insurance settlement. Paying a contractor a large sum for a temporary repair job could leave a homeowner without enough money for permanent repairs. In most cases, homeowners should be able to make the temporary repairs themselves. Ask an insurance professional for guidance and remember to keep receipts.
• Never pay a contractor in full or sign a completion certificate until the work is finished and the reconstruction is up to current code.
• A common scam is for a so-called ‘contractor’ to convince a homeowner that a large deposit must be provided before repair work can begin, according to the I.I.I. Frequently, the job will be started, but not completed and these con artists are never heard from again.
• Another fraud scheme is to use inferior materials and perform shoddy work that is not up to code in order to pocket more profit.
• While the choice of a contractor or service provider is up to the homeowner, if it leads to more damage, which an insurer will have to pay to have repaired, the insurer has the option to subrogate against the contractor who did the faulty work—whether the contractor is licensed or not.
• Anyone who believes they’ve been approached by an unlicensed or unscrupulous contractor, or have been encouraged to fabricate an insurance claim, should contact their insurance company, the local police or the National Insurance Crime Bureau hotline at 1-800-TEL-NICB (1-800-835-6422). Complaints can also be texted to TIP411, with the keyword “FRAUD.”
