INSURANCE INFORMATION INSTITUTE New York Press Office: (212) 346-5500;
media@iii.org
NEW YORK, August 30, 2011 — If your home was damaged or destroyed Hurricane Irene, you may be too distraught to be cautious. However, disasters can bring out unscrupulous contractors that prey on the victims, according to the Insurance Information Institute (I.I.I.).
After a disaster, contractors and others providing services to those with damaged homes or businesses will often go door-to-door to offer their services. While many of these business people are reputable, unfortunately many are not. The dishonest ones may execute schemes to defraud innocent disaster victims.
“For many homeowners who are victims of contractor fraud it has either forced delays in rebuilding or has completely halted the rebuilding process after a disaster,” said
Loretta Worters, vice president with the I.I.I.
The I.I.I. provides these basic guidelines that can help prevent you from being defrauded after a disaster:
- Ask to see the salesperson’s drivers license and write down their license number and the license plate number of their vehicle.
- Investigate the track record of any roofer, builder or contractor that you consider hiring. Look for professionals that have a solid reputation in your community. You can call your 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 the contractor’s proof of liability and workers compensation insurance. Make sure they are also licensed and bonded.
- Occasionally, even licensed contractors develop financial difficulties, have employee or credit problems, or fail to keep their license current. Contact your local contractor license board before signing any contract or advancing any large payments for work.
- Ask your insurance agent or company representative for a list of reputable contractors if you do not know one yourself.
- Beware of price gouging. 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 need to be specified.
- Never sign a contract containing blanks; unacceptable terms can be added later by a dishonest business person.
- 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 the insurance total settlement. If you pay a contractor a large sum for a temporary repair job, you may not have enough money for the necessary permanent repairs. In most cases, you should be able to make the temporary repairs yourself. Ask your insurance agent. And remember to keep receipts.
- Never pay a contractor in full or sign a completion certificate until the work is finished and you are sure reconstruction is up to current building codes.
“A common fraud scheme is for a so-called ‘contractor’ to convince a homeowner that a large deposit must be provided before repair work can begin,” said Worters. “Frequently, the job will be started, but not completed and these con artists are never heard from again. Another 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 yours, if it leads to more damage that 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.
If you believe you have been approached by an unlicensed or unscrupulous contractor, or have been encouraged to fabricate an insurance claim, contact your insurance company, the local police or the
National Insurance Crime Bureau hotline at 1-800-TEL-NICB (1-800-835-6422). You may also text your information to TIP411, keyword “FRAUD” and remain anonymous if you so desire.
THE I.I.I. IS A NONPROFIT, COMMUNICATIONS ORGANIZATION SUPPORTED BY THE INSURANCE INDUSTRY.
Insurance Information Institute, 110 William Street, New York, NY 10038, (212) 346-5500