Finding Normal After the Disaster: Scams & Licensing
How to avoid scams when rebuilding after a disaster
October 1, 2013 by Angie's List staff
Dealing with the heartbreak and frustration of property damage following a major storm are bad enough, but a shady storm-chasing contractor can make things much worse. To protect yourself financially, follow these tips:
1. Say no to door-to-door solicitations.
2. Always get multiple estimates.
3. Be on-site for any property inspections.
4. Avoid companies with temporary offices; ask for local references.
5. Check contractor licensing with state or local officials, or the Angie’s List Licensing database.
6. Verify bonding and insurance to determine whether liability and workers’ comp policies are big enough to cover your job.
7. Don’t tell bidding contractors how much your policy will cover for the damages. Instead, ask for a “scope of loss” document that outlines materials and work needed, without prices, from a trusted contractor, public adjuster or insurance company.
8. Avoid large down payments — and be wary if they want money upfront that’s more than a third of the job’s total cost.
9. Never sign over your homeowner’s insurance settlement upfront and avoid a company that offers to pay or help with your deductible.
10. Get lien waivers from the contractor at the same time you make a payment for materials and work. They constitute proof of payment and protect you if a general contractor fails to pay subcontractors.
11. Don’t sign a contract with blank spaces. Always obtain an original copy with both party’s signatures.
Vet for trade licensing before you hire
In the aftermath of a disaster, national experts and highly rated service providers say it’s crucial for homeowners to be especially vigilant in checking licensing regulations and hiring reputable, legally compliant companies.
Licensing rules vary state to state. Most states require a license for at least a few home-improvement trades, while cities and counties may require additional licenses. For instance, Oklahoma plumbers, HVAC contractors and electricians must be licensed by the state. In Indiana, however, only plumbers, water well drillers and water well pump installers need a state license, but regulation of other residential trades, including general contractors, falls to individual communities.
Many states also require contractors to provide proof of liability insurance, and display license or registration numbers on all contracts, bids and advertising. They also restrict licensed professionals from sharing or loaning out their license numbers, an offense that may result in a fine or jail time. Some states also require out-of-state contractors wishing to do work in their state to register for an employer identification number, and post a bond equal to three times the tax liability or 10 percent of any contract they get in the state.
To understand trade-licensing requirements in your community, check out the Angie’s List License Check Tool, and then verify a contractor’s status with the appropriate licensing agency before you hire.
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