The season for Tropical Storms and Hurricanes are upon us. Hurricane Harvey dropped more than 50 inches of rain in Texas and ended up in Louisiana, which was hit hard by Hurricane Katrina in 2005. This was the most rain ever recorded in the contiguous U.S. from a hurricane. Homeowners across Texas faced the challenges of re-building their homes from scratch.
In addition, Hurricane Irma is one of the strongest storms ever recorded in the Atlantic. It caused devastating effects in the Caribbean and hit Florida. According to former Governor Scott, this storm was larger and stronger than Hurricane Andrew which caused extensive damage to Floridians.
After storms like these, it’s important for residents of hurricane-hit areas to know the difference between a public adjuster and a carrier’s claims adjuster. Public adjusters are licensed claims handlers who advocate on behalf of the consumer, while negotiating and appraising the consumer’s insurance claim. What we see happening after major storms is that some unlicensed people posing as public adjusters (along with some nefarious attorneys and contractors) will persuade homeowners to give up their insurance rights (also known as “Assignment of Benefits”).
“Assignment of Benefits” was a legal tool that allows contractors/vendors who make repairs to receive payment from insurance companies for work they provide at a policyholder’s home, without the homeowner having to pay money upfront, says Michael Carlson, president of the Personal Insurance Federation of Florida.
“However, in the past decade, unscrupulous trial lawyers and vendors have taken advantage of the AOB to take control of a homeowner’s policy and then inflate the scope of work and the cost of the claim, then turning around and suing the insurance company if they refuse to pay these inflated bills,” Carlson says. Florida has since responded: for residential property policies issued on or after January 1, 2023, Florida law no longer allows homeowners to assign post-loss benefits.
This is a problem for all residents because, as more fraudulent claims are submitted to insurance companies, insurance rates go up.
Here are a few tips for property owners to avoid being scammed during hurricane season:
Call your insurance carrier first. Before you have any work done on your property, contact your insurance carrier. They are the experts on the claim and know your policy. Remember that you are responsible for paying your deductible. In Texas, it is illegal for a contractor to offer to waive, rebate, or absorb it, so treat any “we’ll cover your deductible” pitch as a red flag.
Beware of unlicensed contractors. We expect an uptick of unlicensed contractors to be descending upon storm-hit areas, sometimes from outside of the state. Out-of-state license plates alone don’t mean someone is a bad actor, but they are a reason to look more closely. Some trades, such as electricians and plumbers, are licensed, and some cities require contractors to register. If you’re approached by a contractor, double-check references, check for a local business address, and confirm their liability insurance directly with the insurance company. Unlicensed or unvetted contractors may perform shoddy work or just take your money and disappear.
Double-check. Before you get someone to do work on your property, check for references, verify any license or registration that applies, and get a written contract. If something seems off, trust your gut. It probably is.
Beware of storm chasers. These are people who move throughout a storm-damaged area, going door-to-door, asking if they can go on your roof and check for any storm damage (even if the storm was miles away from you). They may be from out of state or from down the street. Then, they’ll create a bogus claim for damages that didn’t exist. For example, some use a dime or nickel to make an impression, which appears as hail damage. Others will lift shingles to make it appear as wind damage. Our advice: Do not let unsolicited people on your roof or on your property.
Understand water remediation. Water damage remediation service is the process of cleaning, drying, sanitizing and repairing any structural damage caused by water. After a hurricane, restoration companies will come out to homes and clean up the mess to try to help save homes from further damage. Be wary. In times of stress, you might quickly make a decision to get your home cleaned up, but some water remediation companies will charge extremely high fees and insist on doing the work immediately (a red flag) or on a verbal contract (another red flag).
Curious to find out more? Here’s our blog that explores lessons learned from catastrophe fraud.