Avoiding Hurricane Insurance Scams in 2019

6/10/2019 (Permalink)

Scams have become more frequent with each passing year and present an additional possibility for a disaster following a hurricane.

Hurricane season always brings the potential for significant property damage, which is often covered under homeowner's insurance policies. Unfortunately, the insurance industry as a whole collects more than $1 trillion a year in premiums, which makes it a prime target for a wide range of fraud, including hurricane scams. While homeowners themselves may be innocent of any wrongdoing, they can also become the unwitting victims of insurance fraud or even unwitting participants. Insurance fraud costs the average American family anywhere from $500 to $700 per year in added premiums. Here are four ways to protect yourself from hurricane scams during the 2019 Atlantic Hurricane Season.

1. Be Wary of Anyone Knocking On Your Door Offering Unsolicited Repairs

For the most part, reputable contractors and repair services will more than have their hands full in the wake of a hurricane. In fact, the long waiting list for estimates and repairs is what creates a prime environment for scam artists. While reputable companies may send out door knockers offering estimates, they will never perform repairs right there on-the-spot.

2. Always Get at Least Three Estimates

You will want to get at least three estimates before deciding on a contractor and check each one carefully to see what work they are recommending. In some cases, unscrupulous contractors may charge for services that should be free and in other cases, they may try and charge for work that doesn't actually need to be performed. When you get estimates, you don't want to just look at the price but also at all the work recommended. If an estimate recommends significantly more or less work than the others, that might be a red flag. In the case of too little work, they may try and bill you more for additional work later and in the case of too much work, they may charge you for services they don't actually perform.

3. Check the Contractor's Credentials Carefully

Any natural disaster brings a flood of impostor contractors, so be sure and check their credentials carefully. In some cases, reputable contractors may come in from nearby areas to help cover the overflow of work, but you should still be able to check their credentials, no matter where they come from. Most states require contractors to carry worker's compensation, property damage, and liability insurance and may even need to be licensed. Ask for a copy of their license and insurance and then contact your local or state licensing agencies to ensure their credentials are in good standing and they meet all the requirements. You will also want to contact their insurance company to ensure their insurance is in good standing and their policy has not lapsed. Last, but not least, you will want to check with reputable agencies like the Better Business Bureau or Angie's List. Your insurance company may even be able to recommend a number of pre-vetted contractors.

4. Get a Clear, Written Contract and Read It Carefully

Before the contractor begins work, you need to ensure you have a clear, written, detailed contract that clearly defines everything the contractor is being contracted to do. This should include prices for labor, materials, clean-up procedures and estimated start and finish dates. Also, make sure there are no blank spaces on the contract that can be filled in at a later date and that you read the contract carefully before signing. One of the biggest scams plaguing the insurance industry is Assignment of Benefit or AOB scams. This is when the homeowner simply signs away their benefits, leaving any negotiations between the contractor and the insurance company. While this may seem like a good deal and alleviate a lot of paperwork, in truth, it opens homeowners up to repairs not being completed and insurance companies being billed for services never performed.