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How to avoid home repair rip-offs
Insurance companies and state regulators urge homeowners to watch out if their home is damaged by severe weather or some other disaster. Con artists are often on the prowl after disasters, looking to rip off people through home repair fraud.
"Most people and businesses will go the extra mile to help you during an emergency. Unfortunately, there are a few who will try to take advantage of your desperation to scam you," warns Roy Cooper, North Carolina’s attorney general. "Don't let them take your money and run."
"Take some simple steps to make sure you do not suffer from another disaster, a man-made disaster caused by scammers," Cooper adds.
Cooper offers the following tips to homeowners after disasters:
- Be safe. Make sure you and your family are safe. Do not attempt to move downed power lines. Call your utility company immediately for assistance.
- Contact your insurance company. Some insurance companies require an adjuster's prior approval before work can be done. Take pictures and videos, if possible, of the damage.
- Do not pay for work up front. Never pay a large sum of money in advance for work. A reasonable down payment might be required for large projects, but no money should be paid until you have a signed, written contract. Avoid paying with cash. Use a check or a credit card.
- Beware of any contractor who tries to rush your decision or who comes to your home offering assistance. If you are in a position to wait, carefully shop around for a contractor. Don't rush into non-emergency repairs. If an offer is only good "now or never," find someone else to perform the work. Seek recommendations from friends, neighbors, co-workers and others who have had work performed on their homes recently.
- Obtain three written estimates for the work and compare bids. Check their credentials. Contact your state’s attorney general and the Better Business Bureau to learn about the contractor's complaint history. Ask to see the contractor's insurance policy, especially if he will perform roofing, painting or tree removal services. If the contractor is uninsured, you might be liable if an accident occurs on the property.
- Make sure the contractor supplies you with a written contract detailing all the work to be performed, its costs and a completion date. The contract should specify the quality of materials to be used, the total price for labor and materials, warranties or guarantees, starting and finishing dates, who will be responsible for clean-up and trash removal, and so on.
- Inspect the work and make sure you are satisfied before you pay.
If you believe you've been approached by an unlicensed contractor or adjuster, or have been encouraged to fabricate an insurance claim, contact your insurer or call the National Insurance Crime Bureau (NICB) hotline at (800) TEL-NICB (835-6422). The NICB is a not-for-profit organization funded by about 1,000 property/casualty insurance companies that combats insurance fraud.
Cons to watch for
"Unfortunately, con artists often try to take advantage of those whose lives have been affected by storm damage and other disasters," according to J. Joseph Curran, the former Maryland attorney general. "In many cases, con artists travel state to state, disaster to disaster, looking for victims of storms."
Curran says people whose homes have been damaged should be wary of offers from home contractors who solicit door-to-door after a storm, especially those who say they will accept only cash payments or pressure the homeowner for an immediate decision. Other storm-related scams might include promises of guaranteed loans for home repairs or solicitations for phony relief efforts.
Former Louisiana attorney general Richard Leyoub says it’s important to keep receipts and documents related to any home repair, especially if it turns out you are the victim of fraud. “We can’t stress how important it is for consumers to keep records of their purchases in price-gouging situations,” Leyoub says. “Keep those receipts because a paper trail is crucial in stopping unscrupulous people. Also, please don’t hesitate to report such activities to the Attorney General’s Office, the Better Business Bureau or local police.”