Avoid Being Victimized Twice: Prevent Contractor Fraud

How to prevent contractor fraud.It is heart-wrenching when our customers are victims of bad storms and natural disasters. It could happen to any one of us.

What is even worse, though, is when opportunists take advantage of customers after storms and natural disasters. These would-be “contractors” promise to repair damage to homes and property, and then they take off with the money without doing the work. In some cases, they may even do the work, but it involves lesser quality materials and workmanship than what they were paid for. This makes our customers victims twice.

Welcome to the world of contractor fraud. This seems to be most common during the storm season that gets under way in the springtime, but it can strike at any time.

Here is a real life example. In May of 2013, storms hit Milwaukee, and in response, American Family Insurance was busily following through on its commitments to its customers.

Out of the blue, one of our agents was contacted by a policyholder who said an individual knocked on her door, claiming that he would repair damage to her home if she would just sign a contract. And here’s the kicker – this individual said he was connected with American Family Insurance.

She almost became a victim … twice. American Family did not send this “contractor” to do repairs.

It is a good thing the policyholder called. After some quick contacts by the American Family Insurance agent, it turned out other policyholders were reporting similar instances in the area, too.

Many were tricked into signing contracts that could be binding, and authorizing repairs that in some cases weren’t even done. During the investigation, we discovered that some policyholders were even being duped into having their settlement checks go to the fraudulent “contractor” company and not to the policyholders themselves!

Thanks to the fast response by the American Family Insurance Property Claims Department and Special Investigations Unit, we helped many other policyholders avoid being taken advantage of.

There are a lot of really good, honest contractors out there. However, if your property is damaged after a storm, we encourage you to do your homework before signing anything.

Here are some simple considerations: 

  • Try to hire local contractors who will be around if any concerns arise with the repairs both during and afterwards.
  • Verify the contractor is licensed and insured.
  • Check references.
  • Consider getting more than one bid or opinion.
  • Consult the Bureau of Consumer Protection and the Better Business Bureau to see if there are complaints against the contractor you’re thinking of hiring.
  • If something doesn’t seem right – give your insurance agent a call!

Don’t be a victim twice – first by having your property damaged by severe weather, and then a second time by having an opportunist cheat you.

Editor’s note: For more tips on avoiding contractor fraud, check out this @dvisor story, as well as this Learning Center article from our website. 

by Jolene Cloyd on Fri, Mar 14 2014 8:36 am
Posted by Jolene Cloyd on Fri, Mar 14 2014 8:36 amJolene Cloyd is a Senior Field Investigator at American Family Insurance.


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