How to Spot a Dishonest Contractor

How to Spot a Dishonest Contractor

Every year, extreme weather events impact millions of homeowners and business owners nationwide. From wildfires to flooding to tornadoes, the damage caused by these catastrophic natural events unfortunately provides an opportunity for dishonest contractors to victimize and defraud homeowners who suffer disaster-related damages. This is why the National Insurance Crime Bureau (NICB) is partnering with local, state and national law enforcement and government agencies to provide tips to help consumers avoid falling victim to dishonest contractors and scammers. Last year, insured catastrophe losses totaled more than $99 billion with 5 - 10%, or upwards of $10 billion, lost to contractor fraud.

The most common scam experienced by homeowners is an exploitation of Assignment of Benefits (AOBs) contracts. In this scheme, bad-faith contractors convince homeowners to sign away their rights to any claims under their insurance policy so they can secure larger settlements to their own benefit.

Before working with a contractor or making any decisions on home-repairs, the NICB suggests the following tips to keep you and your family safe from this scheme:

- Call your insurance company for details on your policy.
- Get more than one estimate and get everything in writing. Cost, work to be done, time schedules, guarantees, payment schedules and other expectations should be detailed and itemized.
- Request references and do the research.
- Ask to see the salesperson's driver's license and write down the license number and their vehicle's license plate number.
- Look out for out-of-state contractor licenses, as well as vehicle registrations, as these may also indicate possible fraudulent contractors.
- Never sign a contract with blanks; terms you don't agree with can be added later.
- Never pay a contractor in full or sign a completion certificate until the work is finished.
- Make sure you review and understand all documents sent to your insurance carrier. Signing an Assignment of Benefits agreement transfers your insurance rights to the contractor. Know what that means for you.
- Never let a contractor pressure you into making a quick decision or hiring them or interpret the language of your insurance policy.
- Never let a contractor discourage you from contacting your insurance company. Contact your insurance company first.

NICB also reminds consumers that the Federal Emergency Management Agency (FEMA) does not endorse individual contractors or loan agencies. Always request official identification from those who say they represent governmental agencies.