Storm Damage Can Take Out Home Repair Scammers
When a hurricane passes through your area, damage to your home may be the start of your problems. Within hours, door-to-door contractors appear, offering quick fixes at prices that seem too good to be true – and often are.
Home improvement scams are an ongoing problem throughout the year. The FTC received 81,925 related complaints in 2024, the most recent year for which data is available, while a JW Surety Bonds survey found that nearly one in 10 Americans had been victimized by a contractor scam in 2023.
Jon Grishpul, founder of contractor-friendly service GreatBuildz, says supply and demand create a sense of urgency to fix the problem. When bad weather hits, good contractors book fast.
“So [homeowners] they are desperate, and they are more likely to hire a contractor immediately,” says Grishpul, who may be ignoring the warning signs.
The pressure to make quick decisions with limited information is exactly what fraudsters exploit. Roofing Contractor magazine reported in February that after recent winter weather events, unlicensed workers were flocking to storm-hit areas with low bids and promises of quick turnarounds.
Winter storms are an important time to repair damage
This winter has given fraudsters a lot to work with. At least six major hurricanes have hit the continental US since late November. Winter Storm Fern alone accounted for $6.7 billion in insured losses in more than 30 states, according to catastrophe modeler Karen Clark & Company, making it among the costliest winter storms since 1950.
Paul Dashevsky, a construction professional with more than 30 years in the industry, warns that some contractors are notorious for sending lowballs. Most bids may come in between $45,000 and $50,000, and then suddenly you’ll find one for $25,000.
Dashevsky says you have to wonder how they can offer such good money, especially since material and labor costs are at a reasonable level. The answer, he adds, is usually one of two things: they’re using leftovers from a previous job or their employees aren’t qualified.
And that’s just assuming the contractor has the intention of following through on the end of the deal. The truth is that they may try to force you to pay them for work they have no intention of completing – or even starting.
How scammers find their victims
A typical home improvement scam begins with an unsolicited knock on the door, possibly followed by an offer of a free inspection and the discovery of sudden, real or exaggerated damage.
“They will say the right things to make you worry and act [something] like giving a deposit to someone you don’t really know,” says Dashevsky, who insists that “you should never make a decision on a big purchase like that on the first day.”
But pressure tactics can make it difficult to tell the smart choice from the short-sighted.
Scam contractors often ask for urgency in order to get a large payment up front, saying something like “your roof may collapse before the next storm” or “this price is only good today.” They can also put pressure on the community by saying that they used to work in a neighbor’s house. After that, they may do a little, low-level work before moving on. Or they may disappear completely.
Some states have strict rules about how much a contractor can ask for in advance. For example, in California, the maximum amount required is the lesser of $1,000 or 10% of the contract value. According to Grishpul, unscrupulous contractors may ignore those regulations entirely, sometimes asking as much as 50% of the estimated cost.
In some cases, the contractor may even suggest deceiving your home insurance company by filing more than the claim is worth. Or, the contractor may cause more damage to increase the insurance claim.
“It’s insurance fraud, but it happens all the time because a lot of homeowners are like, ‘$10,000 free or $20,000? What could go wrong'” Dashevsky said. “Even if you don’t get caught, is this the kind of contractor you want to work with?”
Home repair fraud protection
The most effective defense against fraudsters is simple: slow down.
Call your insurance company before letting anyone inspect your property. Grishpul highlights that home insurance will pay for repairs quickly “to stop the bleeding” so you can properly inspect and vet the contractor before you hire him to do the actual repairs.
Be sure to confirm if the contractor is legal with your state licensing board before agreeing to anything. You should be able to see their license, the owner’s name, how long they have been in business and if they have a bond, workers’ compensation insurance and general liability insurance.
Looking at online reviews is also a good idea, but ratings can be skewed by overly positive or negative feedback. In some cases, the updates themselves may be made. Instead, use them to search for clues: ask if they were homeowners or partners, what the relationship was like, how everything went, what the initial bid was and how much the project ended up costing.
Once you’ve decided on a contractor, it’s important to use a trackable payment method.
“Some bad contractors will ask you to pay in cash. They will say: ‘I can give you a better discount if you pay in cash. You can avoid tax, I can avoid tax. I will transfer that money to you.’ Bad idea,” said Grishpul, who urges shoppers to always leave a paper trail.
Ultimately, he adds, vetting a contractor is a lot like dating. Everyone will be on their best behavior on the first day. But as you get to know them better, some red flags may start to appear.
“If a contractor is hard to get in touch with, if they’re being rude, or if they’re not performing well in any way, that’s a sign that they’re probably not going to treat you well if you hire them,” Grishpul said.
More from Mali:
What You Should Know Before Replacing Your Windows
4 Tips to Plan (and Budget) for Unexpected Home Renovations
Home Insurance Price Increases Far Outpace Inflation. Here’s Where Premiums Are Most Expensive
