Scam Alerts
Fraud: An Unnatural Disaster
It can happen to anyone… Hurricanes, tornados,
floods or fires can leave your home and business in ruins. You want
to get back on your feet quickly.
But a disaster also lures crooked building contractors and public
insurance adjusters. They’ll exploit the confusion and emergency
conditions to try and fleece you and your insurance policy.
Most contractors and public adjusters are honest and competent.
They’ll do their level best to make you whole. But know the
warning signs of a swindle — and how to fight back.
Just as important, don't try to inflate or fake insurance claims
yourself. Insurance companies work to settle claims fast during
a disaster, but they're also watching for fraud. Jail time, fines,
humiliation, and separation from your family and friends —
it's a big price for trying to scam a few insurance dollars.
Contracting with Contractors
Several bids. Obtain two or three written
repair bids, if possible. They should include all costs, what work
will be done, schedule for completing the work, and guarantees.
- But... don't accept a bid just because it's the lowest. Lowball bids such as "special hurricane deals" and "limited time offers" could be fraudulent.
- And… don't pay for repair bids. Crooked contractors
may simply take your money and disappear. Most reputable contractors
won't charge you simply for bidding on your repair work.
-
Local contractors. Use established local contractors, if possible. But… be careful if the contractor arrives in an unmarked vehicle, seeks your repair work door-to-door, or tries to cut costs by using materials "from another job." These contractors may be unlicensed, dishonest and untrained transients from another state who are trying to make a quick dollar at your expense.
- Often they'll use low-grade material.
- Their work may be shoddy and even dangerous.
- They may disappear with your money after finishing only part of the job, or not doing any work.
Licenses. Ask to see a contractor's required state or local licenses, and write down the license numbers. Also ask contractors for proof that they have liability and workers compensation insurance.
Look professional? Does the contractor have professional-looking business cards and letterhead? If not, you could be dealing with an untrained and incompetent "wildcatter."
Signed contract. Get a signed contract — before work begins. But don't sign any contract with blanks. A dishonest contractor could fill in unfair or fraudulent terms later.- Also... make sure it's a legitimate, printed document — not something scratched out on a piece of paper. Make sure you have a copy for your files.
- A contract protects you: Dishonest contractors may only partly finish the job, then demand more money to complete the work. They may also threaten to sue you if you don't pay, even if the work is shoddy or unfinished.
No advance payment. Don't pay a contractor in full before work begins, or before it's finished. The contractor could disappear with your money, leaving your repair job unfinished. Normally you should only pay about 20 percent or less upfront.
- And... don't pay extra when a contractor says the cost of materials has "suddenly increased." Pay only what's spelled out in your signed contract.
No cash. Never pay in cash; pay only with check or credit card. A contractor who demands cash may be trying to avoid paying taxes or buying legally required insurance.
Repairs insured? Check with your insurance company to make sure your policy covers the repairs. Also have your insurance adjuster estimate the damage and probable cost to repair. This will give you a reliable basis for negotiating repairs with contractors.
Inspect damage. If practical, have an adjuster from your insurance company inspect your damage before repairs begin. Your insurance company may require an adjuster's inspection before you rebuild.- Your insurance claim could be denied if you make expensive, permanent repairs before the adjuster inspects the damage.
Cooling off. Federal law requires a three-day "cooling-off " period for unsolicited door-to-door sales of more than $25.00. You can legally cancel your construction contract within this time period.
Signing off. Sign the certificate of job completion only when all repairs are finished to your satisfaction, and per your signed contract.
Fight back. Contact your state insurance fraud bureau and local office of consumer affairs right away if you suspect a repair scam.
