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How to Avoid Contractor Fraud After a Hurricane

How to Avoid Contractor Fraud After a Hurricane

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If there is a disaster in your area, whether it’s a hurricane or some other event, you can rest assured there will be contractor fraud. The problem is one of demand. Disasters such as Hurricane Katrina in New Orleans or Superstorm Sandy in the New Jersey, New York and other northeastern states left thousands of homes and businesses destroyed or damaged. More than 100,000 homes were damaged by Sandy in New Jersey alone, while more than 130,000 homes were damaged in New Orleans by Katrina. After the storm, thousands of home and business owners were battling over a limited number of contractors. Owners of homes and businesses damaged in a hurricane should follow these tips to avoid becoming victims of contractor fraud.

Slow down. Everyone wants to get back to normal after the storm, but the rush to get a contractor – any contractor – to begin work makes it easier for unscrupulous individuals to commit contractor fraud. It’s bad enough your home was damaged or destroyed. Imagine how much worse you’ll feel if your contractor does a shoddy job or simply steals your money. Recognize that you may be in a hotel or at a friend or relative’s home longer than you’d like. Don’t hire the first contractor you meet and don’t eliminate the important steps that will help you make an excellent choice.

No cash. Experts in Louisiana, Florida, New Jersey and elsewhere agree that one of the signs of a potentially fraudulent contractor is a request for payments in cash. Also, don’t agree to an unusually large down payment – certainly no more than 25 percent and 10 percent is more reasonable. A reliable contractor will be able to charge much of the materials needed for the job. Other warning signs include requests to write a check in the name of a particular worker instead of the company.

Get a complete contract. Make sure the entire job is spelled out in the contract and do not deal with any contractor that won’t include a guarantee for their work. The signed contract will spell about payment requirements and can also offer a general time frame for the repairs. A written and signed contract is your protection in the event of a disagreement over the quality of the work.

Check out the contractor. It’s OK to deal with a contractor from another part of the country as long as they have taken the steps to register in the state and can show proof of bonding and insurance. Get the address and name of the contractor and both the insurer and bonding agent for the contractor. Call the bonding company to verify the insurance. Look up the proper state contractor’s licensing board to verify the contractor’s address and ensure the license is current. Ask for references, even if it is a customer in another state, and follow through with a phone call.

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