In 2023, the United States experienced a record-breaking number of natural disasters, with 28 separate events each causing at least $1 billion in damages. The total catastrophe losses exceeded $93 billion, marking a historic year for weather and climate-related disasters. However, the aftermath of these events often brings an additional, less visible burden: post-disaster fraud. According to the National Insurance Crime Bureau (NICB), up to 10% of the annual disaster-related costs—equating to approximately $9.3 billion in 2023—are lost to fraudulent activities by dishonest contractors.
NICB Warns Homeowners of Contractor Fraud: Essential Tips for Protection
As part of Contractor Fraud Awareness Week, running from May 20 to 24, the NICB is highlighting these alarming figures to raise awareness and protect homeowners from becoming victims of such scams. David J. Glawe, president and CEO of NICB, emphasizes the severe impact of contractor fraud: “Contractor fraud costs hardworking Americans billions of dollars every year. After a natural disaster, fraudulent contractors exploit the vulnerabilities of unsuspecting homeowners, promising affordable renovations, repairs, or construction projects that often result in broken promises, shoddy workmanship, and depleted savings.”
To combat this, the NICB collaborates with government agencies and insurance carriers to educate homeowners and businesses on how to avoid insurance fraud. Here are some essential consumer tips recommended by NICB before hiring a contractor:
Assess Damages
After a natural disaster, the first step is to assess the damages and contact your insurance provider for clarification on coverage. This ensures that you are aware of what your insurance policy covers and can plan repairs accordingly.
Recruit a Professional
Before any possible dishonest contractors knock on your door, find a licensed, insured, and well-reviewed contractor. Establishing a schedule in advance is crucial because reputable contractors are frequently booked far in advance.
Research and Verify
Make sure you fully investigate a contractor’s background, standing, and performance history before hiring them. Verify their licenses, certifications, and insurance coverage. Check for reviews from previous clients and inquire about any past complaints or legal issues. Reliable sources include the Better Business Bureau, state licensing boards, and online review platforms.
Get Multiple Quotes
Obtain bids from multiple contractors for comparison. Significantly low bids should be avoided, as they could be a symptom of poor quality work or unstated expenses. Strive for equilibrium between cost and excellence. Seek for an equilibrium between quality and price. This step helps ensure that you are getting a fair price and quality work.
Beware of Red Flags
Watch out for warning signs including pushy sales techniques, evasive or unclear responses, or a reluctance to give contracts or written estimates. Proceed with caution if something seems off. Fraudulent contractors often use these tactics to push homeowners into quick, regrettable decisions.
Written Contracts
Never settle for anything less than a formal contract that outlines the materials, timetable, scope of work, and payment terms without requiring significant up-front costs. Make sure that all terms and conditions are specified in detail and accepted by both parties by thoroughly reading the contract. A comprehensive contract protects both the homeowner and the contractor.
Stay Involved
Continue to be actively involved in the project by keeping an eye on its progress and keeping in regular contact with the contractor. Keep records of all work communications, including emails, texts, and notes from phone conversations. This ongoing involvement helps ensure that the project stays on track and allows for early detection of any issues.
Seek Legal Advice if Necessary
If you suspect contractor fraud or if significant problems arise during the project, seek legal advice promptly. Legal experts can provide guidance on how to address the issues and take appropriate actions to protect your interests.
In addition to these tips, the NICB emphasizes the importance of community awareness and collective action against fraud. By staying informed and vigilant, homeowners can help prevent fraud and ensure that post-disaster recovery efforts are successful and efficient.
Natural disasters are challenging enough without the added stress of dealing with fraudulent contractors. By following these guidelines, homeowners can protect themselves from becoming victims of post-disaster fraud and ensure that their recovery process is as smooth and secure as possible. The NICB continues to work tirelessly to support victims and advocate for stronger measures against fraud, aiming to reduce the economic impact on individuals and the insurance industry as a whole.
