Homeowners carry insurance on their property in case disaster strikes. Most people compare homeowners insurance options before settling on a policy. The two most important factors to consider are coverage and price. If your house burned down, would your policy pay to rebuild it? Can you afford the annual premiums, or should you lower them by raising the deductible? The point is: It takes some research to find the perfect policy.
Now, what if your insurance agent told you your premiums were doubling? You’d be confused and frustrated, and rightfully so. Experts say premiums could double over the next five years for homeowners in some locations thanks to illegitimate “disaster restoration” companies.
When a natural disaster strikes, opportunists pose as restoration companies and scam homeowners. These “companies” do so by having victims sign an Assignment of Benefits (AOB) form, effectively handing over their insurance payout to the restoration company. The company then inflates their charges, putting a strain on insurance companies. Some contractors do hasty, incomplete, or unsafe work—others simply pocket the insurance payout and run. They may even sue your insurance company for partial or unpaid claims. Insurance companies are sometimes forced to settle to avoid mounting defense costs.
After hurricanes Harvey and Irma, premiums might rise as a direct result of the actions of these dishonest restoration organizations. Fortunately, homeowners can take measures to protect themselves against post-disaster scams like these. First and foremost, avoid signing over your AOB to the first storm chaser you meet. Although AOBs were originally meant to protect policyholders, be aware that they’re sometimes abused by dishonest scammers.
Take care to vet all potential renovation companies and contractors you work with. Reputable construction professionals should have proof of:
● Proper state licensing
● Written estimates and scope of work
● Past projects with references
According to the Federal Trade Commission, you can check out a company or individual’s licensing validity by contacting your local building department. It’s also a good idea to check out their Better Business Bureau ratings before signing any paperwork. If you do strike up an arrangement with anyone, get every detail down in writing. A verbal agreement isn’t enough; a written contract is the only way to hold both parties accountable.
Last but not least, it always pays to check with your insurer—especially in the chaotic aftermath of a natural disaster. It’s a red flag if a contractor says they can work around insurance or expedite the process.
Taking these steps can help reduce the number of inflated claims and lawsuits insurers deal with. In turn, this can keep costs reasonable for everyone across the board. The last thing anyone wants is for homeowners insurance premiums to double in the coming years!
Looking to protect your finances against the ravages of a natural disaster? Compare homeowners insurance for free with CoverHound, where you’ll find affordable quotes from top insurers.