When dealing with an insurance claim and hiring a contractor, it's essential to be vigilant to avoid contractor fraud. Here are some tips to help you stay protected:
- Verify Credentials: Ensure the contractor is licensed, insured, and bonded. Check with your local licensing authority (in Arizona, make sure to look up the contractor on the Arizona Registrar of Contractors).
- Check References: Ask for and follow up on references. Look for reviews online and check with the Better Business Bureau (BBB).
- Written Estimates: Obtain multiple detailed written estimates. Be wary of quotes that are significantly lower than others.
- Contracts: Ensure everything is in writing. The contract should include the scope of work, materials, timeline, and total cost.
- Insurance Proof: Request proof of insurance from the contractor, including workers' compensation and liability coverage.
- Avoid Large Upfront Payments: Be cautious if a contractor demands a large upfront payment. A reasonable down payment is usually 10-30% of the total project cost.
- Payment Schedule: Agree on a payment schedule tied to specific project milestones.
- Regular Updates: Maintain regular communication with the contractor and request frequent updates on the project status.
- Site Visits: Periodically visit the project site to ensure the work is progressing as planned and according to the contract.
- Unsolicited Offers: Be wary of contractors who show up unsolicited, especially after a disaster.
- High-Pressure Tactics: Avoid contractors who use high-pressure sales tactics or try to rush you into a decision. Be wary of signing anything that waives or transfers your rights under an insurance policy to another entity.
- Cash Payments: Be cautious if the contractor insists on cash payments or offers to handle the insurance claim on your behalf.
- Preferred Contractors: Your insurance company may have a list of preferred or recommended contractors. Using these can sometimes offer additional assurances.
- Claim Adjuster: Work closely with your insurance claim adjuster to understand what repairs are covered and what the reasonable costs should be.
- Lien Waivers: Request lien waivers from the contractor to ensure that you won’t be liable for payments the contractor owes to suppliers or subcontractors.
- State Laws: Familiarize yourself with your state’s contractor laws and your rights as a consumer.
By taking these precautions, you can significantly reduce the risk of falling victim to contractor fraud and ensure that your insurance claim process goes smoothly.
