After a major storm subsides, watch out for a flood of crooked contractors and public adjusters offering to help your ministry recover. You could feel the cost from theft or shoddy repairs for years. Listen for five phrases that scream “scam” and learn what to do if you’ve been misled.
Repair scams tend to increase after storms and disasters, but they can happen year-round. If you encounter one of these phrases in a flyer, ad, or sales pitch, turn and walk away. If your ministry does business with this organization, things are about to get messy.
‘We’ll Give You a Free Estimate.’ Scammers often come out after a storm or disaster, offering free damage inspections to victims with property damage. You may figure, “why not?” After all, it costs the ministry nothing, and it may speed repairs. While many contractors will provide an honest assessment at no cost, avoid allowing someone you don’t know to inspect your roof. An unethical person may lie about the extent of damage or use a hammer to make it worse. Think you had hail damage before? Now you really need repairs.
‘We’ll Waive Your Deductible.’ Some repair companies offer to waive your insurance deductible if you hire them. It may sound like a blessing, but it’s not. In fact, it’s probably illegal. If someone offers to pay, rebate, or waive your deductible, you may be dealing with a person willing to commit insurance fraud—a crime in 48 states.
‘We’ll Handle Your Claim.’ If a storm repair company offers to file insurance paperwork on your behalf, beware. It may inflate cost estimates and demand payment for work or supplies that you don’t receive. One church that suffered hail damage spent more than a year patching the problems caused by a repair company that billed the church’s insurer for more than $200,000 in repairs that the church had either finished with volunteer labor or hired another contractor to complete.
‘We’ll Subcontract the Job.’ If the person you’re dealing with plans to subcontract the whole project, end the conversation. For best results, you’ll want to work with a bonded, insured contractor who is licensed in your state. This gives you some assurance of quality, as well as recourse for incomplete or unsatisfactory work. If unlicensed, uninsured subcontractors do a poor job, you may have to live with the consequences or hire someone else to get it right.
‘Pay Us, and We’ll Get Right to Work.’ Refuse to deal with anyone pressuring you to sign a contract or insisting you pay them right away. Some scammers will request money from your insurance check to buy materials and promise to come back the next day. When they don’t return, you still need repairs, and most (or all) of your insurance money is gone. If your ministry has property insurance, do not give a repair person ANY money or sign ANYTHING until you have submitted a claim with your insurance carrier.
Your ministry deserves better treatment than it will get from a fly-by-night operation. Research your options and only deal with experienced builders whose work is backed by a guarantee. That’s why you want a licensed professional who is bonded and insured. Ask the contractor to provide the following:
Contractor’s license (in YOUR state)
Proof of liability and workers compensation insurance
References from other customers, preferably of similar size to your ministry.
You’ll want to verify all references and check for complaints filed against the contractor through the Better Business Bureau. This BBB article offers more tips on avoiding repair scams.
Once work begins, it’s always a good idea to assign someone to be on the job site at the ministry while contractors are there, watching the workers and asking questions. That can help you spot issues with a contractor who isn’t doing what he’s being paid to do. For more, read “Guidelines for Hiring a Contractor.”
In most cases, you can work directly with your insurance company’s adjuster to resolve your claim. Sometimes, ministries hire public insurance adjusters to assist them.
Public adjusters work on commission, typically earning 10-15 percent of whatever the insurance company pays to settle your claim. While many are honest people who will negotiate a fair settlement on your behalf, some will use the same tactics as crooked contractors.
Before hiring one, the Coalition Against Insurance Fraud recommends that you do the following:
It’s possible to hire a contractor or public adjuster who seems like the right person for the job, only to later find out he’s not. Perhaps he’s licensed, he’s local, and he didn’t present any warning signs. But he later does something that makes you uncomfortable, like repairing something he promised to replace. Or installing lower-quality materials than you had agreed upon. What can you do about it?
The first step is to call the person’s attention to the issue and ask him to make it right. Most reputable vendors will be willing to work with you. But some may become angry or threaten to sue, hoping that you’ll back down. Don’t fall prey to intimidation. Talk with your insurance agent. Even if the person does file suit, your insurance policy may pay to defend you.
If your contractor won’t make amends, call your insurance adjuster. Your adjuster will be glad to help ensure that the repairs are done properly. If you suspect fraud, your adjuster can report the contractor to the state’s insurance department for investigation. You can also file a complaint with the BBB.
A lot of fraud is opportunistic—people taking advantage of a situation. It’s important to understand what this type of fraud looks like and how to respond when you see it. This way, you can avoid the trouble that comes with taking the bait. Not only that, but you can also return your focus to ministry matters more quickly.
“We have claims that should have been fixed within six months, and they have been open for three years because the contractor is falsely making the claim worse than it was,” says Julie DuVall, a senior subrogation expert and fraud investigator with Brotherhood Mutual Insurance Company.
Fraudulent property and casualty claims cost about $34 billion* each year, according to the Insurance Information Institute. Insurance companies generally pass the costs of bogus claims onto policyholders. This contributes to a premium spiral that can price insurance coverage beyond some ministries’ reach. By working with ethical contractors, you’re not only helping your ministry—you’re also helping keep insurance affordable for thousands of other ministries across America.
* Background on Insurance Fraud. Insurance Information Institute. November 16, 2017. https://www.iii.org/article/background-on-insurance-fraud
Thank you for your interest in Brotherhood Mutual. We appreciate the opportunity to provide your church or other ministry with an insurance quote and will reply to your request as soon as possible.
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