Avoiding Ripoffs From Contractors and Insurance

What if someone says he is from the Insurance Division or my insurance company and offers to speed up my claim if I pay him some money?

• Beware of anyone who makes this kind of claim.
• Ask this person’s name and immediately report him or her to your insurance company or the Iowa Insurance Division.

What if somebody else offers to help speed up my claim in exchange for some of my insurance benefits?

• Call the Iowa Insurance Division about this kind of person, too.
• Consult a lawyer before signing any contract.

How can I keep from paying too much for repairs?

• Find out as much as you can about the workers.
• It is especially important to find out about people who come without you calling.
• It is also important to check out people who come from out-of-town after a natural disaster.
• Ask if the worker is bonded or insured. Ask to see proof.
• Ask if the worker is licensed.
• Contractors who do small, odd jobs may not have to be licensed.
• Ask if your job requires a permit.
• Most construction and major home repairs need a permit from the county or city.
• Do not let someone talk you into applying for the permit in your name. If they do not want to be known to local officials, they may be hiding from a bad reputation.
• Get a written estimate, detailing the work to be done and setting a completion date.
• Ask for references. Get names and addresses. Call the references. Consider going to see some of the work the contractor has done.
• Avoid paying too much money up-front.
• You should pay only a minimal amount, perhaps as much as one-fourth, to indicate good faith and ability to pay. If they tell you more money is needed in advance, be wary. They should have sound financial standing to pay for supplies or have good credit to make necessary purchases until you compensate them afterward.
• Make sure you can contact the contractor. Be wary if they can only give you a beeper number or a post office box address. Businesses with established addresses are usually safer.
• Ask questions to find out if the price is in line with pre-disaster prices.

How can I find a good contractor?

• First, beware of builders or contractors who go door-to-door selling their services.
• Be extra careful of someone not known in your community. Sometimes, someone will offer you a low price, saying he just did some work near you and has materials left over. Get the names of the people who hired him. Call the people who hired the builder or contractor and ask them if they were happy with the work done.
• Deal only with licensed and insured contractors. Look into the work of any roofer, builder or contractor you are thinking of hiring. Get a list of recent pleased customers. Call them.
• Ask friends, relatives, neighbors, co-workers, insurance agents or claims adjusters for recommendations. Also, call your Better Business Bureau to see if the contractor has any complaints filed against him or her.

What should I know before I sign a contract?

• Do not let anyone rush you into signing a contract. Get written estimates from at least three firms.
• Ask contractors if there is a charge for an estimate before letting him or her in your home.
• Do not automatically choose the lowest bidder. First, see if the low bidder is going to do all you need done.
• IMPORTANT: Get a copy of the final, signed contract.

What is the best way to pay the contractor?

• Beware of contractors who ask you to pay for the entire job before starting any work. If a contractor says you have to make a down payment, it should not be more than one-third of the total price.
• Do not pay cash. Pay only by check, money order or credit card.
• Pay the final amount only after the work is finished and you are pleased.

What if the contractor says I should just make temporary repairs for now?

• Beware of contractors who want you to spend a lot of money on temporary repairs. Make sure you have enough money to finish permanent repairs.

What if I need a loan to pay the contractor?

• Be careful about putting your home up as security for a home improvement loan. If you do not repay the loan as agreed, you could lose your home.
• Have someone you trust read a contract before you sign. If you get a loan to pay for the work, have someone read these documents too.

What if I think a contractor has cheated me?

• Call the consumer division of your state Attorney General’s office. The Iowa Attorney General’s consumer hotline is 1-888-777-4590.
• If you suspect fraud, waste, or abuse involving Federal Emergency Management Agency (FEMA) disaster assistance programs, you can make a confidential report to FEMA’s Inspector General’s Office. Call 1-800-323-8603. Fax: 202-254-4297. Report online: www.oig.dhs.gov/hotline
• You also can file a complaint with the Federal Trade Commission (FTC). Although the FTC cannot resolve individual problems for consumers, it can act against a company if it sees a pattern of possible law violations. Here are possible ways to contact the FTC:

1. FTC Consumer Response Center toll-free line: 1-877-FTC-HELP (1-877-382-4357)
2. Hearing impaired toll-free line for FTC Consumer Response Center: 202-326-2502.
3. Internet (online complaint form) at reportfraud.ftc.gov/.
4. Mailing address:
   Consumer Response Center
   Federal Trade Commission
   600 Pennsylvania Ave. NW
   Washington, DC 20580
5. The FTC publishes free brochures on many consumer issues. For a complete list of publications, write for “Best Sellers”
   Consumer Response Center, Federal Trade Commission
   600 Pennsylvania Ave. NW
   Washington, DC 20580

       Or online at www.bulkorder.ftc.gov/publications?f%5B0%5D=audience%3A2