Insurance Fraud Advocacy: Let’s warn about crooked contractors before storms

Early notice gives consumers more chance to guard against scammers

Hurricane season is only a week old, but it’s already active with two tropical storms hitting the southeastern U.S. This season likely will see more storms than the last few years, forecasters say.

And that gives crooked home contractors a chance to ply their trade. Insurers, government agencies and anti-fraud organizations have stepped up efforts in recent years to warn consumers about contractor fraud. But much of that communication comes after the damage is done. Vulnerable and often-traumatized homeowners are focused on getting repairs done quickly at that point

Such outreach is helpful, but the time to start is when  storms  approach, not afterward. One insurer in Florida e-mailed  its policyholders this week, urging them to “Call before you sign.”

“If a contractor promises to take care of ALL of the paperwork, think twice and call your insurance company before you sign away your rights,” the message reads “Florida homeowners are becoming victims of insurance fraud because of a common scheme used by a variety of dishonest contractors that abuses the ’Assignment of Benefits’ (AOB) law to hijack your claim.”

Assignment-of-benefits scams involve contractors who are in cahoots with attorneys. As soon as the homeowners signs over a claim to the contractor, the attorney sues the insurer for repair costs, which may be inflated. The law firm then is entitled to legal fees, often at levels most people would consider outrageous. The attorney then might kick back a few dollars to the contractor.

Consumers usually aren’t aware of what’s happening behind the scene and probably don’t care. They just want their property fixed.

That’s why the word needs to get out as soon as storms approach — when homeowners are thinking about the possibility of damage — and before some slick contractor can lure consumers into signing away their valuable policy rights.