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Avoid superstorm Sandy insurance and repair scams

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.

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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