Much of the East Coast is still dealing with the aftermath of super storm Sandy and this will continue for the months and years to come. Last week, I talked about some great informational resources for people in the immediate aftermath of the storm. Now, I want to dive a little bit deeper into the ways you can avoid storm damage repair scams and work in harmony with your insurance company to get everything back in order.
Step One: Check with Your Insurer
You must check with your insurance agency before you:
- Begin to do your repairs
- Before you hire anyone
- Before you pay anyone
Ask your insurer to survey the damage and get your claims on file with them. During this process, you will need to know:
- What specific damage the insurance company will cover
- What the insurance company will pay and reimburse.
- You will also need to know the specific procedural process required.
- Will the insurance company need to approve a repair before you do it in order to be qualified for reimbursement?
- Do they need review any contractor estimate and contract before they approve for reimbursement?
- Do they need to approve the actual contractor who is doing the work first?
Save all receipts , including those for food, hotel or other expenses that may be covered under your policy.
Step Two: Finding The Right Contractors - Avoid Scam Contactors
Do your due diligence before you hire anyone, give anyone any money or sign a contract. Be aware of and remember the following:
- Never let anybody inside your home who arrives at your door without an appointment.
- Do not hire someone who shows up at your door offering unsolicited home repairs. One of the most common scams is when someone the arrives at your door and pressures you to hire them on the spot because they have "lots of material left over from another job" and can give you a great discount today only.
Additional red flags:
- If they don't have proper ID and business card.
- Does their company's business card show a PO Box address rather then a street address?
- Step outside to take a look at their car or truck. Do they have their company signage on the truck, with company name and address? Is their license plate from out of state?
- Don't hire a contractor who says he's supported or approved by the government. The Federal Emergency Management Agency does not endorse individual contractors.
- Check out the contractor's record with your local Better Business Bureau.
- Ask to see copies of their licenses. Some cities, counties and states allow you to verify licenses online to make sure the contractor is licensed and insured to do business in your area.
- Ask for copies of the contractor's general liability and worker's compensation insurance. You only want to work with a fully insured contractor.
- Ask for references. - past job address and contact phone numbers - then call them!
- Go online! - There are great on line community resources out there. Such as Trulia Voices,Yelp or Angie's List.
- Check with your insurer to see if they have a list of recommended contractors.
Step Three: Contracts and Payments
Before you hire or anyone:
- Get at least three estimates for the work to be done
- Get everything in writing on the company's letterhead
- Have a written, detailed contract that clearly states everything the contractor will do. This written contract needs to include: what specific work will be done, the materials that will be used and the price breakdown for labor and materials.
- Any promises made verbally should be written into the contract, including warranties on the work, start date, specific payment schedule, completion date and penalty for missing the completion date
- Make and keep a copy of the contactor's licenses and insurances for yourself!
- Never pay in advance
- Never pay in cash.
- Avoid paying more than the minimum up front. Some companies will ask for a deposit, I suggest paying no more than 25% of the job in advance. Pay them only after materials arrive on your property and work begins. NEVER give any money to anyone until you have done your full assessment of the contractor and have a signed contract.
- Get a receipt for each payment, you will need to submit them later to your insurance company - and your taxes for the following year. FEMA may also require all your receipts, contacts and paperwork
- Prepare for a "changed order." Often times either you or the contractor may suggest an added repair or improvement that was not originally discussed. If you do any "add ons' Make sure you receive a written "Change Order" in writing with the additional cost clearly spelled out.
- Never make your final payment until all the work it completed.
We continue to send our best thoughts and wishes to those recovering from the devastation Sandy left behind. Throughout the recovery process, due diligence will be key to working with your insurance company and contractors.
Michael Corbett is Trulia's real estate and lifestyle expert. He is also the host of EXTRA's Mansions and Millionaires on NBC. In addition to his regular segments on ABC's The View and Fox News, he is a national bestselling author with three critically acclaimed real estate books:Find It, Fix It, FLIP IT!; Ready, Set, SOLD! and Before You BUY! His years of experience in buying, renovating, and selling homes have made him a sought-after nationally recognized real estate expert.