From wildfires in California to hurricanes in Florida and Texas, disasters rattle the American landscape each year. In addition to causing billions in damage, natural disasters may subject homeowners to opportunists hoping to take advantage of confusing and turbulent times.
Contractor fraud is rampant following a natural catastrophe. Though some states have passed laws aimed to protect homeowners from contractor fraud, such as prohibiting rebates and allowing for contract termination, the fact remains that homeowners must be vigilant to avoid potential scams.
Not every professional who goes door-to-door offering to clean up or make repairs after a catastrophe is out to scam you. However, this is a common tactic by folks who might try to defraud victims after a major, community-wide disaster.
Fraudulent service providers may try to:
That’s why it’s so important to contact your insurance company before you begin any construction or repair work on your home following a disaster. They can guide you on next steps and make sure you work with trusted contractors.
One of the most common forms of contractor fraud in Florida is an assignment of benefit (AOB) scam. In this scam, a homeowner signs a document assigning benefits from an insurance policy to a contractor. This allows the contractor to deal directly with the homeowner’s insurance company to:
Essentially, signing an AOB may mean an unscrupulous contractor can claim benefits for work that was never actually completed.
Thankfully, AOB scams have gotten a lot of attention and Florida’s Senate Bill 2A has taken aim at the problem in an effort to reduce the scam’s frequency and effect.
In addition to calling your insurance company before you hire a contractor, as a general rule, if you didn’t request the work, don’t accept it.
These pointers can help you find a reputable contractor when you are ready to get repairs on your home underway.
You might be asking yourself, “So what? Who cares? Isn’t this the insurance company’s problem?” Oh, if wishing made it so.
Contractor fraud has significant effects on homeowners who fall victim to the scam. These homeowners end up with poor claims histories that can lead to homeowners seeing drastic rate increases – or even difficulty getting coverage at all. In fact, AOB benefit scams in Florida are one major reason why rates are continuing to climb so fast in that state.
Plus, if an insurance company finds that a homeowner was in any way complicit with the fraud – or had reason to suspect one was being committed – the homeowner may face legal consequences as well.
Insurance fraud also has significant impacts on the broader economy as well . When one homeowner in a particular area falls victim to a scam, it can increase the cost of coverage for others in their area. Depending on the size and scale of the fraud, these effects may be amplified as local businesses and property values are impacted.
If you think you’ve been solicited by an unlicensed contractor or adjuster or have been asked to fabricate an insurance claim, contact your insurance company immediately. You can also call the NICB hotline at 1-800-835-6422 or text your information and FRAUD: to TIP411.
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