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How to protect yourself from contractor fraud after a disaster

construction contractor
Posted at 2:49 PM, May 30, 2023
and last updated 2023-05-30 16:49:43-04

DENVER — Coloradans are no strangers to catastrophic events. Wildfires, floods, blizzards, hailstorms, tornadoes — Denver7 has covered them all. And we've also covered the aftermath, when all too often, people who are already vulnerable are preyed on by criminals. The stories are heartbreaking: shoddy work, disappearing contractors, and thousands of dollars lost.

We see the faces behind the staggering numbers. In 2022, the National Insurance Crime Bureau reported $100 billion in insured losses from catastrophic events across the United States, and it estimates about 10%, or $10 billion, went to criminal networks.

"These criminal networks that operate within a state. They even come from overseas because they know about money," said David Glawe, president and CEO for the National Insurance Crime Bureau. "They victimize the people twice. They've been the victim of the catastrophic event, the natural disaster, and now they're being victims of crimes. And these are very sophisticated networks."

Before a disaster happens, Glawe said, there is something you can do to protect yourself, something many Coloradans learned the hard way from the Marshall Fire. Hundreds of homeowners found out their homes were dramatically underinsured after the COVID-19 pandemic and supply chain shortages drove up the costs of materials and construction.

  • Step 1. Check your insurance coverage. Call your insurance carrier and make sure you have the right coverage and replacement costs in place.
  • Step 2. Watch for red flags. If someone cold calls you or shows up at your door offering to do repairs and clean up, that is a red flag. Reputable contractors generally do not go door-to-door to recruit clients.
  • Step 3. Vet your contractors. Use your insurance carrier, the Better Business Bureau and your neighbors to vet your contractors. Make sure they're licensed and insured.
  • Step 4. Go Slow. Get three bids, and check their references. Once you find someone, don't pay in full upfront. You may have to pay a small down payment (usually about 10%), but make sure you get your money's worth.

And remember — don't trust someone just because they seem trustworthy.

How to protect yourself from contractor fraud after a disaster

"They know how to speak to the victims. They are silver tongue devils, they are financial crime experts," said Glawe. "So do it the right way. Go slow, go methodical, and go through the process. Cutting corners never pays off. If you get the work done at all, they're going to steal from you or it's going to be poor or shoddy work that could put you at risk."

For more information on hiring a contractor after a disaster, the NCIB offers tips, contractor search tools and toolkits here.

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