Tips for avoiding shady contractors following a wildfire & other disasters

Original article can be found here.

By Steve Hallo 

As the residents of Maui continue to grapple with the toll from the island’s recent wildfire, which was one of the worst in U.S. history, the National Insurance Crime Bureau (NICB) is warning policyholders to be on the watch for unscrupulous contractors looking to hit vulnerable targets in the wake of the disaster.

The NICB reported that of the more than $99 billion in insured catastrophic losses in 2022, around 5%-10% (or about $10 billion) was lost to contractor fraud.

“Recovering from damages caused by wildfires is a daunting task for businesses and homeowners. As important as it is to prepare for these events before they occur, it is also vital to be prepared for what comes after,” NICB President and CEO David Glawe said in a release. “After a wildfire, like any natural disaster, consumers need to be aware of dishonest contractors who may use these events as an opportunity to take advantage of victims and their insurance providers.”

According to the NICB, shady contractors most commonly exploit assignment of benefit contracts. This scheme involves convincing a homeowner to sign over their rights to any claim under their home insurance policy, in turn allowing the contractor to secure a larger settlement for their own benefit.

The NICB stressed that the Federal Emergency Management Agency doesn’t endorse individual contractors or loan agencies. Further, policyholders should also request official ID from those saying they represent a government agency.

This advice should also be heeded by those facing losses from Tropical Storm Hilary’s movement across the West Coast.

Before making repair decisions or signing an agreement with a contractor, the NICB recommends policyholders do the following:

  • 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.


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