As Texas and parts of the South-Central U.S. recover from widespread flooding and hail damage, the National Insurance Crime Bureau (NICB) reminds consumers to beware of buying flood-damaged vehicles and falling victim to unscrupulous home repair contractors.
The worst losses occurred in Texas where hail caused an estimated $600 million worth of insurance claims for damage to homes and autos.
Car Sales Fraud
As with all major natural disasters, NICB assists law enforcement agencies, insurance and car rental companies with identifying and cataloging water-damaged vehicles to keep them from being resold to unsuspecting consumers.
Already, authorities estimate that thousands of vehicles may have been flooded.
"NICB agents see it time after time. Natural disasters bring out dishonest salvage dealers who don't tell you that the vehicles they're selling are heavily water-damaged," said NICB President and CEO Joe Wehrle.
"Consumers need to know that these vehicles may appear advertised for sale without any indication that they were affected by the flooding. As always, buyers should be careful when considering a used vehicle purchase in the weeks and months following a disaster like this."
To help avoid buying a vehicle that has been declared salvage (including flood-damaged vehicles), NICB recommends that buyers take advantage of its free online service called VINCheckSM. VINCheck contains vehicle data from insurance companies representing about 88 percent of the personal auto insurance market and lets buyers see whether a vehicle has ever been declared as "salvage" or a total loss. It also alerts users if a vehicle has been stolen and is still unrecovered.
Home Repair Fraud
In the weeks ahead, homeowners in disaster areas should be alert to the potential for fraud by unscrupulous contractors and home repair businesses.
"Fraud is an unfortunate reality in post-disaster environments," said Wehrle. "As any recovery gets underway, fraudsters often converge on affected areas to scam disaster victims out of their money while promising to do repairs. The last thing victims of disaster need is to be victimized again."
After a disaster, contractors often go door-to-door in affected neighborhoods offering clean up and/or construction and repair services. Most are reputable, but many are not. One common scheme is to pocket a down-payment and then never show up for the job, or never complete a job that was started. Another scheme is to use inferior materials and perform shoddy work that is not up to code in order to increase profit.
"If you didn't request it, reject it"
Almost all of these scams are unsolicited—they begin with a visit from a contractor who seeks to help victims rebuild. That is why NICB recommends that "if you didn't request it, reject it." Before hiring any contractor, call your insurance company. Your insurance company will honor its policy so there is no need to rush into an agreement with a contractor who solicits your repair work—especially when you did not request it.
Unlike other states, Texas does not require a license for a roofing contractor nor is one required for solicitation. Local jurisdictions, however, may impose certain requirements before contractors can solicit work within their boundaries. One example is the City of Garland that requires anyone soliciting for the purpose of selling or offering to sell goods or services, must first retain a solicitation permit through the Garland Police Department.
NICB suggests you consider these tips before hiring a contractor:
- Get more than one estimate
- Get everything in writing. Cost, work to be done, time schedules, guarantees, payment schedules and other expectations should be detailed
- Demand references and check them out
- Ask to see the salesperson's driver's license and write down the license number and their vehicle's license plate number
- Never sign a contract with blanks; unacceptable terms can be added later
- Never pay a contractor in full or sign a completion certificate until the work is finished and ensure reconstruction is up to current code
- Make sure you review and understand all documents sent to your insurance carrier
- Never let a contractor pressure you into hiring them
- Never let a contractor interpret the insurance policy language
- Never let a contractor discourage you from contacting your insurance company
Consumer Resources
- For a free brochure with tips to avoid post-disaster fraud, click here.
- For useful checklists, including how to spot flood and salvage vehicle scams and post-disaster contractor repair schemes, click here.
- For free consumer access to the vehicle salvage records of participating NICB member insurance companies who collectively provide 88 percent of the auto insurance in force today, access NICB's VINCheck.