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When disaster strikes twice: home repair & contractor fraud

In 2021, the Federal Trade Commission (FTC) received nearly 70,000 reports on home repair, improvement, and product fraud. 

According to the National Insurance Crime Bureau (NICB), insurers pay billions of dollars each year to cover losses caused by severe weather. Unfortunately, these payments also end up in the pockets of unscrupulous contractors. This may happen in large scale events like hurricanes and wildfires or small localized damage in neighborhoods from hail and windstorms. Demand for contractors will be high after a storm. Getting repairs to your home or property after a natural disaster requires patience and diligence. Take the time you need to thoroughly evaluate your options.

Before you hire any contractor for storm-related repairs, always contact your insurance agent to be sure repairs will be covered. 

Tips to help find a quality contractor

  • Get multiple quotes from local established contractors.
  • Take time to make your decision.
  • Do your research. Look into professional affiliations and Better Business Bureau reports and follow up on references from previous clients. You can also contact the National Roofing Contractors Association for assistance in locating a local contractor.
  • Check for up to date licenses and verify insurance protection. Not all jurisdictions require licensing of roofing contractors while other cities require contractors to have a license on file before they are able to get permits. Ask to see certificates of insurance to be sure both liability and workers compensation insurance coverage is carried, and are in force during the time the roofing work is being done.
  • Insist on written estimates and a contract that includes contact information, important dates, and a breakdown of costs. This includes permits. According to Federal Trade Commission rulings, you may be able to cancel a contract of more than $25 within three business days of signing it at your home or in a seller's temporary business location.
  • Ask if they plan on using subcontractors: If they are, make sure you review the subcontractors as well.
  • Ask for references: Request a list of projects they have worked on in the past and request to speak with the customers.
  • Question low bids: Use caution (ask questions) before accepting a bid substantially lower than other bids covering the same repair work.
  • Be cautious of deposits: If the contractor offers you a pay today for a discount price, be cautious.
  • Get a receipt: Be wary of contractors who want cash and make sure you get a receipt of payment for each payment.

What are warning signs of a shady contractor?

Be watchful of the following tactics. Trust your gut. If you don't have a good feeling about the contractor, don't use them.

  • Offers unsolicited services: If a contactor stops by and gives you an unexpected estimate for projects like driveway sealing, chimney rebuilds and roof repair — projects that are commonly pitched to homeowners.
  • Has "material left over": Be cautious if the quote includes a reduced price on the work because of "materials left over from a job down the street".
  • Home demonstration discount: If the quote includes a discount for using your home as a demonstration.
  • Extra pushy: Employs pushy door-to-door sales tactics.
  • Limited time offers: If the contractor says you need to place a deposit immediately to secure a spot in his schedule or to get a good price on material.
  • Not local: Appear to be from out of town or working out of a pickup truck.
  • Demands immediate payment in full: You should not pre-pay for any work.
  • Accepts cash only: Always a red flag.
  • Provides no written contract: All the details of the work should be written out in advance.
  • No references: And are not willing to produce them.
  • No insurance or licensing: Fails to provide proof of insurance and proper licensing.
  • Finance through a friend: Suggest financing or recommend financing through someone they know.
  • Ask you to secure any required permits: Most communities require the contractor to acquire the proper permits.

If you think you have been scammed or a victim of contractor fraud, you should contact local authorities and report it to the National Insurance Crime Bureau and Better Business Bureau. You should also report them to your state’s Consumer Protection offices.

About State Farm®:

For over 100 years, the mission of State Farm has been to help people manage the risks of everyday life, recover from the unexpected and realize their dreams. State Farm and its affiliates are the largest providers of auto and home insurance in the United States. Its more than 19,400 agents and 67,000 employees serve over 91 million policies and accounts – including auto, fire, lifehealth, commercial policies and financial services accounts. Commercial auto insurance, along with coverage for rentersbusiness ownersboats and motorcycles, is also available. State Farm Mutual Automobile Insurance Company is the parent of the State Farm family of companies. State Farm is ranked No. 44 on the 2023 Fortune 500 list of largest companies. For more information, please visit

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