With property damage estimates topping out at $20 billion and homeowners desperate to get started recovering, there will be plenty of scammers coming out of the woodwork. CNBC's Sharon Epperson and Jeanne Salvatore of the Insurance Information Institute discuss how you can avoid getting ripped off.
By Ben Popken, TODAY contributor
After the storm comes the rebuilding, and the scammers capitalizing on fear and need. With $20 billion estimated in property damage, demand for clean-up and repair is high, putting anxious homeowners at risk for hard-sell fly-by-night contractors. They promise a big fix, push for your cash up front, then drive off with repairs poorly completed, or not at all. Now you've got a hole in your roof, and your wallet.
Jeanne Salvatore of the non-profit Insurance Information Institute and CNBC's Sharon Epperson spoke with TODAY's Savannah Guthrie this morning about how to protect yourself from what could be a secondary disaster - giving money too quickly to a con-artist trying to catch a ride off superstorm.
The number one red flag for any kind of scammer, but especially after a natural disaster, is that they come to you. Without a reputation or referrals, a grifter has to go cold-calling to drum up business. Squint your eyes carefully at anyone who comes knocking at your door, take their information, and don't get pressed into making an on-the-spot decision.
1. Don't pay in full up front
Never pay for more than 1/3 of the job before it's done. Otherwise there goes your security against work not completed or not done up to code.
2. Don't get rushed
Someone who promises to start work right away or bump you to the head of the line if you pay in full, and then threatens that you won't be able to get anyone else to fix it if they walk away, is trying to push your buttons.
3. Call your insurance agent
Your insurance agent "is a disaster clearing house," says Salvatore. Call them first. This is what you've been paying all those premiums all this time for! They can make recommendations from a list of pre-vetted contractors.
On top of being able to give you a referral, you need to be talking to them because your first priority should be reporting your claim to your insurance company, documenting all the damage, and taking photos and/or videos of everything.
4. Check to make sure they're legit
Ask to see their contractor's license and driver's license. Ask for references, and call them. Check out their
BBB profile. Provided you have internet access, scanning their customer reviews on free sites like
Yelp and pay sites like
Angie's List can fill out the picture and give you a quick bead on their reputation.
In addition, "Make sure that the contractor is the one who will be paying the subcontractors -- the plumber, the electrician," says CNBC's Epperson. "So that you don't get an unanticipated bill."
5. Get quotes
Just because it's a catastrophe doesn't mean you shouldn't shop around. Take their business card and tell them you'll get back to them, after you've gotten quotes from at least two other providers.
Downed phone, electrical, and internet access may make it harder to comparison shop or reach the people you need to. It's worth taking the extra time. You don't want to rush from a natural disaster into a financial one.
6. Alert investigators
If you think you've been solicited or ripped off by a scammer, call the police. You can also file a report with the National Insurance Crime Bureau at 1-800-TEL-NICB (1-800-835-6422).
7. Trust your gut
Says Salvatore, "If something doesn't feel right, it probably isn't."
Superstorm Sandy made landfall Monday evening on a destructive and deadly path across the Northeast.
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the biggest scam is that insurance companies actually care about you. the agents will come quick but only with the agenda to buy you off as cheap as possible. hand you a cup of coffee a teddy bear and a check less than the real value. insurance agents are as scummy as lawyers just not as smart. can you tell iv'e had some bad experiences? its not about you its about the dollar period. good luck
agents don't handle claims, adjusters do. and i have never had the experiences you talk about. perhaps you just had the wrong ins. company?
i know of someone who had less coverage than he thought. the company reviewed it, and is offering to re-do his policy so that he can then be covered, and the damages paid for.
doesn't sound like a rip off to me.
bones, yup it's about the dollar. But if you had no insurance, would you have the financial ability to pay for the repairs? Didn't think so. Heck most of the people barely have enough liquid funds these days to cover the deductible, particularly if it's a named-storm deductible. So that ends up getting passed on to FEMA which ends up getting passed on to everyone else. Which is full circle as it brings it back to the original essence of insurance: spread the risk among many. Shame you can't see that insurance is probably one of the most socialist leaning business models out there.
Deb, in reality the insurance company is doing that because it's no money out of their pocket at this instance. The losses have far exceeded the kick-in level for their reinsurance policies. The insurance companies are merely passing those losses on to reinsurers. Whether they pay some $5K or $50K makes no difference to their bottom line any more. It will of course affect the reinsurer.
Watch out for the travelers ...they are a bunch of inbred scum who will rip you off...
Is Sandy supposed to be a female storm or a maelstrom? Why is a name indecisive as to a specific gender used? Oh, we must pander to those with non gender specific names lest we are accused of being insensitive towards them. After all, who needs another frivolous lawsuit costing the taxpayers money?
WTF are you talking about? The article is about insurance scams and your going on about being upset that the storm is named Sandy. Please tell me your joking?
I did NOT hear you complaining about Hurricane Andrew. Its just a name take it up wqith the people that created the list.
While I don't think your question is serious, my answer is:
Hurricanes are named alternately boy-girl-boy-girl.
The one before Sandy was Raphael and the one after her is Tony, so she was definitely a female Sandy.
If the BBB is the same as the one in FL they are worthless. they say yes there in good standings yet when they screw you over they say they can NOT do anything to help.
Your own insurance will try to scam you before anyone else ever does. They all have a hand in your pocket and that is never good. BEWARE
sounds like you've had bad dealings, but personal experience does not equal fact. there are bad people all over, but that doesn't mean the entire industry is evil. most of them do exactly what they say they would.
be cautious of bbb ratings. companies pay to be members, and bad companies have paid lots of money to that 'bureau' to maintain a good rating, when in fact they have earned and deserve a bad one.
good contractors are busy. beware of someone who can 'start immediately'. make sure they're insured, and have a contract. 1/3 up front, 1/3 about midway thru completion, and the final 1/3 at the finish is what you should have your payments set at.
ins. co's cannot require you to use someone, but they can give good referrals. get second and third opinions, references, and most importantly, call those references! our homes are most peoples' single most expensive investment. don't go cheap, don't go quick-do your due diligence so you're not regretful later.
The Nigerian Prince will fix up your house for you
What color is the sky in your world??? I pay exhorbitant, over-the-top insurance payments, so that my insurance company can label ANY claim as an "Act of God" and refuse to pay a f**ing penny.
When people ask what happened to the Mafia, I tell them they went into the insurance business, because the money is better, and they're already accustomed to the sleaze.
You get what you pay for. Many dumb people buy by price and the lowest price wins.
It never enters their mind to pay for the coverage they need, until they need it.
This is a warning regarding a company that is a "Storm Chaser". HQ is in St. Louis. Statewide Roofing and Restoration, Inc. Owned by Travis Miller. These guys take your insurance money then never do the work. No doubt they will get a bunch of people in NJ and NY. My unrepaired damage is still from Irene. Unfortunately my Property Manager hired them when my Renter finally reported damage 7 months later. I have been through hell trying to get them to honor the committment to do my roof in New Bern NC. The article is incorrect or Jeanne Salivtore is VERY uninformed. The police will do NOTHING. My insurance company, USAA won't even agree to put them on a blacklist. You, of course, must hire an Attorney who will probabaly charge you more than the roof money paid out! I have had good luck with the BBB and Mr. Miller hates the complaint. Today was his last day to do the work. BYE BYE SCAMMER!
SCAM WARNING IN Northern NJ... I was scammed for insurance money after hurricane Irene by a water remediation company called Restoration 1 . Do NOT use them....
Voter in LA is absolutely correct. In the affected states reinsurance will kick in. I am an insurance adjuster in a different state. This article gives excellent advice. Also, beware of any contractor who pressures you to sign a contract on their first visit. That is a typical practice of the storm chasers. They say they will do the work for the extent of your insurance check and then make off with it and not do repairs, do shoddy work, or if insurance doesn't pay what they think they then pressure you for more money. This is especially true on non-typical insurance contracts on much older homes.
Typically, insurers pay more than enough to do the work. It is greedy contractors on the make who try to make it out that there are insufficient funds. The insurance estimating programs contain built in cost factors based on the geographical areas and labor rates. The contractors use the same programs--but for contractors.
Not all construction workers steal materials off the job. I have a friend who knows a guy whose uncle's friend had a contractor that was honest.
Many people are unaware that their homeowners policy does not cover damage by flood, which is defined as water flowing over the ground. Even if the flood water is a result of a storm, as much of the damage was from Sandy, it isn't covered. You are covered for rain damage from broken windows or a blown-off roof but not flood water.
There are separate policies for flood insurance and they are surprisingly inexpensive, so don't blame your homeowners insurance when they refuse to cover flood damage.