Avoid Contractor Scams After Storms

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Storms can leave your home severely damaged. Here's a checklist to ensure that you don't get ripped off while you're in the rebuilding process.

Even when the sun is shining and life is good, finding competent contractors is a time-consuming and difficult process. After a hurricane, when emotions prevail and work is needed urgently, it’s all too easy for owners to fall prey to contractors who are incompetent and even unscrupulous. If you’re an owner, it’s imperative to understand contractor credentialing as well as how to verify a document’s authenticity. Although thoroughly vetting a contractor requires the investigation of several sources, your initial research should address professional licensing and insurance.

In regard to licensing, there are many kinds of licenses and often a single professional will have several licenses — each with a specific purpose. Sometimes a business license (e.g., the “business tax receipt” or the “certificate of use”) is mistaken for a professional license. The difference between them is this: A business operating license pertains to the business while a professional license pertains to the individual. It is important to note that the business license authorizes a company to engage in business, but it does not authorize an individual to perform a trade.

To verify a contractor’s professional license you must do two things.

  1. Determine if the government having jurisdiction over your project requires a license for the contractor’s trade.

  2. Confirm the contractor’s compliancy with this government entity.

The Internet allows easy access to a seemingly unlimited amount of information. The challenge lies in finding accurate, current, and complete information quickly. This is more likely accomplished if you enter the most relevant search words in your search engine. Since your goal is to reach government websites, include words like “state of” and “county of” as well as “contractor licensing.” For example, the search term “State of Florida contractor licensing” will prioritize the search return that links to Florida’s Department of Business and Professional Regulation. Since current and accurate information is essential, perform your research on a government website.

In addition to licensing, a contractor should also be insured. This is often a requirement of licensing but it also makes good sense to verify it anyway. Workers’ Comp and General Liability coverage are important because construction is dangerous and you are exposed to loss if an uninsured contractor is injured or causes injury to the public.

Workers’ Comp insurance is readily confirmed on state websites. To confirm General Liability coverage as well as Workers’ Compensation insurance, ask the contractor to have his or her agent send the Certificate of Insurance directly to you. This helps to reduce the likelihood that a document is forged. You are also well served to meet with your licensed insurance agent to discuss the merits of being listed as additional insured, as well as discussing other important issues such as policy limits, etc.

Because vetting a contractor takes time and effort, you are wise to do your research before the influx of unlicensed and uninsured practitioners who prey on the disaster-weary.

To get a comprehensive picture of a contractor’s qualifications, character, and past performance, perform the following steps:

Contractor Candidate Checklist

  1. Assemble a minimum of three contractor candidates by:

    • Referrals from qualified sources

    • Advertisements from legitimate sources

  2. Research your state's and local government’s professional licensing requirements for contractors at:

    • State Professional Licensing Division

    • Local Building Department

  3. Confirm the contractor’s professional licensing (if required) at:

    • State Professional Licensing Division

    • Building Department

  4. Research your state’s workers’ compensation requirements at:

    • State Insurance Division

    • Building Department

  5. Confirm the contractor’s workers’ compensation insurance (if required) at:

    • State Workers’ Compensation Division

    • Building Department

  6. Research your state’s general liability insurance requirements at:

    • State Professional Licensing Division

    • Building Department

  7. Confirm the contractor’s general liability insurance with:

    • Contractor’s insurance company

  8. Research the contractor’s qualifications and character through:

    • Public records

    • State Professional Licensing Division

    • State Division of Corporations

    • Building Department permitting database

    • Legal records

  9. General web search inquiry

    • Better Business Bureau’s Reliability Report

    • Angie’s List

    • Facebook

    • Twitter

    • LinkedIn

  10. References

  11. Professional association memberships

Kia Ricchi is a Florida licensed contractor, consultant, and author of Avoiding the Con in Construction—winner of three national book awards and included in the Library Journal’s “Best of” list. She is a contributor to NPR affiliate stations, Remodeling Magazine, and FineHomebuilding.com, TheStreet.com, Inman.com, and MoneyPit.com. Endorsements include the National Association of State Contractor Licensing Agencies and the Building Officials Association of Florida. Kia accepted this Year’s 2013 Florida Governor’s Hurricane Conference Corporate Award for her substantial contributions to hurricane recovery that include her new online contractor verification service, www.iCheckContractors.com.

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