Avoiding Contractor Fraud Scams
How They Target You
You’re enjoying a sunny afternoon on your patio when your doorbell rings. Not expecting company, you head to the front door of your house and there stands a person with a tablet in his hand, dressed like a construction worker. You open the door, confused, and can see a van with ladders on top in your driveway. The man begins to tell you that you may need a new roof and is offering a free inspection. He calms your worries about the expense by stating that your insurance company would pay for the repairs to your roof. Of course, he is willing and happy to help with that process. So, you let him on the roof to check it out. While he’s up there, he tapes golf balls to his shoes to put dents in your roofing material to mimic hail damage. He breaks shingles off and causes unnecessary damage. When he comes down, he exaggerates the damages and pressures you into signing a contract for repairs, offering you a lowball number upfront. Shocked and concerned as hurricane season is swiftly approaching, you agree to sign. He’s got to be an honest guy, right? He whips out the tablet and you sign to get the process started. Now you’re in big trouble.
What Happens Next
Contractor fraud is one of the leading causes that is driving homeowners insurance premiums through the roof (see what we did there) in South Florida. Homeowners are seeing premium increases of 30-40% or more and the end doesn’t seem to be anywhere in sight. The market is in complete disarray and it’s these scammers are one of the reasons that we are all suffering. According to Claims Journal, “the insurance industry has complained loudly that schemes by roofers to claim that age-related wear and tear is due to wind or hail damage, to be covered by insurance payments, have grown more numerous in recent years and are driving up insurance costs and premiums”.
Why? How is this happening? Well, you didn’t actually need a new roof. The fraud damaged your roof to make it seem like you did. When you signed that tablet, you signed what is known as an Assignment of Benefits (AOB). An AOB is a legal contract that transfers your insurance rights to a third party (in this case, that scheming “contractor”). So what does this mean? The contractor now has full authority over your insurance and you have no involvement. He can directly bill your insurance company for services and be paid directly, file a lawsuit against the insurance company, and even endorse checks.
This nightmare of a trap has affected our community members throughout the state and has resulted in an unsettling amount of payouts from carriers, causing them to pull out of the market entirely. Carriers are also grappling with high reinsurance rates and many are not writing any new business for Floridian homeowners.
What to Watch For
Red flags to watch for to not fall victim to contractor fraud:
- They show up unsolicited and offer you an incentive to check your roof
- Insists you file an insurance claim or says a deadline is approaching for claims
- Insists you sign documentation without offering you a copy to read prior to signing (never sign anything without reading!)
- Doesn’t have references, but claims to have worked on neighbors homes
- Provides an estimate without specific details/itemization
- Is unable to provide you with General Liability or Workers’ Compensation documentation
- Pitches you a “one day only” price
Our suggestion? If you believe you may need repairs for your home, file a claim with your insurance company first. They will be able to provide or verify vendors that are legitimate and have proper coverages. Your insurance agent here at Burke, Bogart, and Brownell is always happy to assist you and answer any questions. Call us at 561.392.8888 or by email at [email protected]