Roof Insurance Fraud
(Your guide to avoiding roof insurance fraud)
Written by
Jeff Green has held a variety of sales and management roles at life insurance companies, Wall street firms, and distribution organizations over his 40-year career. He was previously Finra 7,24,66 registered and held life insurance licenses in multiple states. He is a graduate of Stony Brook University.
If someone knocks on your door and offers to inspect your roof for free they may represent a reputable and quality roofing contractor. They may also be scammers trying to use you to commit insurance fraud. In this article we’ll tell you what to look for and how to protect yourself.
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What Is Insurance Fraud?
Insurance fraud is deceiving an insurance company to receive payment or compensation. It is a serious crime in most jurisdictions, punishable by fines, community service, probation, and even jail time.
When a contractor exaggerates or creates damage for the purpose of filing an insurance claim, it can be considered fraud. Unfortunately, the homeowner, not the contractor, may ultimately be held responsible.
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Will Homeowners Insurance Pay For A New Roof?
Homeowners insurance covers damage to your roof from a number of hazards such as:
- Fire
- Falling trees
- Hail
- Wind
- Acts of God
The insurance company, however, expects the homeowner to maintain the roof in good condition. They will not pay to replace a roof that is simply worn out or fix problems that are a result of normal wear and tear.
Roofing scammers attempt to exaggerate or fabricate damage and entice the homeowner with “no out-of-pocket cost” because the insurance company will pay for it.
Common Roofer Scams
Storm chasers
Storm chasers are roofing contractors who travel to areas that have had recent episodes of severe weather. The storm chaser knocks on the door and offers to fix the damage at no cost to the homeowner. The homeowner is convinced to file an insurance claim, because let’s face it, we all love free stuff.
The contractor doesn’t charge the deductible, does superficial or no work at all, and disappears. Or the contractor inflates the bid and doesn’t charge the homeowner for the deductible. Maybe they do the work, maybe they don’t.
Free inspections
This scammer “just happened to be working in the neighborhood” and noticed some damage. The scammer offers to go up on the roof and inspect it for free.
After the inspection the conclusion is, of course, that the roof has substantial damage and needs to be fixed right away. By the way, the scammer happens to be finishing a job down the street and can give you a great price.
This scammer may use the same insurance fraud tactics as the storm chaser. They may also get to the middle of the job and tell you that due to unforeseen circumstances, the cost of materials has gone up. Either you pay it or they can’t finish the job.
Down payments
This is a scam used at the start of the job. The scammer insists on a down payment for materials and insists that the first insurance check gets signed over to them. The scammer disappears and the work doesn’t get done. Senior citizens and homeowners with no mortgage are often targets for this scam.
How To Protect Yourself
There are many scams out there, but they are all variations on insurance fraud. Don’t let anyone on your roof without doing your homework. Here are 9 questions you should ask a roofing contractor.
- Ask for a permanent place of business, telephone number, tax identification number and, where required, a business license.
- Insist on seeing copies of the contractor’s liability insurance coverage and workers’ compensation certificates. Make sure the coverages are in effect during the job. (Note: US workers’ compensation laws vary by state. Consult your state’s laws to determine workers’ compensation insurance requirements.)
- Request client references and a list of completed projects. Call these clients to find out whether they were satisfied.
- Check to see whether the contractor is properly licensed and/or bonded. Call your state’s licensing board for your state’s specific requirements (where applicable).
- Insist on a written proposal and examine it for a complete description of the work and specifications, including approximate start and completion dates and payment procedures.
- Check to see whether the contractor is a member of any local, state, regional or national roofing industry associations, such as NRCA.
- Call your local Better Business Bureau to check for any complaints that have been filed.
- Ask the contractor to explain their project supervision and quality-control procedures. Request the name of the person who will be in charge, how many workers will be required, and the estimated time of completion.
- Request a roofing warranty. Carefully read and understand it and watch for provisions that would void it. Keep a healthy skepticism about the lowest bid. If it sounds too good to be true, it probably is. Remember, price is only one criterion for selecting a roofing contractor. Professionalism and quality workmanship also should weigh heavily in your decision.
An Ounce of Prevention
Your roof, like the rest of your house, needs periodic maintenance to keep it in good condition. One way to do that is a maintenance agreement with a professional roofing contractor.
- A maintenance program is proactive (rather than reactive). It can help to identify problems in their early stages when they can be corrected and before they become catastrophes.
- Regular maintenance can reveal and address sources and causes of leaks before they occur. Too many owners have their roof systems examined only after a leak occurs.
- A maintenance program allows for a planned, organized approach to management of a roof asset and allows for responsible, timely preparation of long-term capital expenditures. Response time to address leakage problems is greatly improved.
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Your Local Independent Agent Can Help You Make Smart Choices
Review your homeowners insurance with your local independent insurance agent. They can advise you on what your policy does and does not cover. They have the experience and expertise to help you make smart choices.
Most importantly, they will be there to help you when claim time comes. The outcome of homeowners insurance claims can be strongly impacted by how the process is approached and handled.