Watch for Contractor Insurance Fraud


The average homeowner probably knows little about the costs of materials and labor for home repairs. Unfortunately, this makes them ripe targets for disreputable contractors who will lie about the extent of a problem in order to make money off of overpriced repairs. Often, the need for such repair is heavily exaggerated, if not completely fabricated. It is important that you act wisely when dealing with contractors so you don’t end up paying for repairs you don’t need.

One especially dangerous type of contractor fraud involves using a homeowner’s insurance to pay for unnecessary repairs. A contractor will begin the process by finding damages and then he or she will offer to fix the damages for little or no cost. The contractor will then cause additional damage before telling the homeowners to file a claim with their insurance carrier. Often, the contractor will assert that the damage was caused by an accidental or weather-related incident.

Contractors often convince homeowners that this is an acceptable use of their insurance policy, when in fact it is a form of insurance fraud. Insurance companies are on the lookout for such behavior and will prosecute when fraudulent claims are discovered. Unfortunately, the homeowner is often the party that is found responsible, not the contractor who caused the damage. Contractors involved in such scams are careful not to do anything illegal on paper, which helps them deny involvement and divert blame toward the homeowner.

Remember, if you didn’t contact the contractor, you probably don’t need them. Be wary of any contractor that shows up at your door out of the blue and claims that your home is damaged. To ensure the problem they discovered is a legitimate concern, always get a second, third or even fourth opinion before committing to anything.