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Insurance checks lure out-of-state companies with no accountability
By Betty Lin-Fisher, Beacon Journal business writer
POSTED: 11:01 a.m. EST, Aug 01, 2007
s been more than a month since the damaging hailstorm of June 8, which ripped through portions of our area, but homeowners dealing with the aftermath are still feeling its effects -- and that might continue for the next year.That's because in addition to thousands of homeowners scrambling to get their vehicles and houses repaired, unfortunately lots of scam artists or less-than-ethical contractors have also flocked to the area looking for quick jobs.
It's always an unfortunate certainty that unethical business people try to take advantage of other people's bad circumstances, especially after natural disasters.
Consumer advocates and I are already hearing about people who have been taken. It's heartbreaking as always. But now, especially, consumers need to do their research and make decisions with a clear head.
Don't let scammers feed off your panicked emotions -- or your insurance settlement checks.
``You have to be responsible for your own actions,'' said Vic Wlaszyn, president of the Akron area Better Business Bureau. Wlaszyn said he's heard and seen people signing blank contracts with contractors.
``That's a huge no-no. You should not do that. What they're telling the homeowner is, `You just sign the contract, we'll take care of everything else.' These are very sophisticated people. These are `storm chasers' that do this for a living,'' Wlaszyn said.
One of the problems from this storm is the large number of people who were affected.
According to a study released on Thursday by the Ohio Insurance Institute, insurers are expecting at least 29,219 claims totaling more than $105 million to be filed from the hailstorm, which mostly hit Springfield Township, Ellet, Mogadore and a small portion of Portage County.
To put it in perspective, the 2002 tornado and hailstorms that ripped through Jackson Township and North Canton resulted in $38.2 million in insured losses. June's hailstorm is the fourth costliest in the state. A storm in Central Ohio last October was the most costly at $239 million.
Wlaszyn estimates there are probably 50,000 homes that were hit.
So obviously that's a lot of roofs that might need repairs.
What's happening is many roofing contractors are going door-to-door trying to get roofing jobs. They're promising good prices but not following through with good service or products or warranties. Others are asking people to put a sign in their yard to keep would-be contractors away until the settlement check comes in so they can have the job.
Adding even more confusion to the mix are reports from the Better Business Bureau that out-of-state contractors are partnering with local businesses, both BBB members and those who are not, to operate under their name. But in some cases, Wlaszyn said, out-of-state contractors are less than ethical and bring down the reputation of local businesses with shoddy work. Even worse, Wlaszyn worries that in months or years when the shoddy work starts to fail, the out-of-state contractors will be long gone. Then consumers won't have any recourse. If a local business were a partner, it might be left trying to pick up the pieces without the funds to do it.
That's certainly not to say that all out-of-town companies or roofing contractors are scam artists. Far from it. There are plenty of out-of-state companies who specialize in repairs after a natural disaster and know what they're doing. But as with anything, there are plenty of ``bad apples'' -- many of them out-of-staters -- who come looking for a quick and easy job that will eventually leave the consumer holding the bag.
I've heard of one homeowner who was approached by several contractors who did not want to give estimates on the roof job, but just wanted to know the amount of his insurance settlement check. Conveniently, their bid was for $7,000, the amount on the check.
That's definitely not the way to go. Don't show a contractor your insurance check or tell them the amount. Have them give you a fair estimate that you can weigh against other estimates to make your decision.
In the above example, a local contractor is doing the job for about $1,600 less. (By the way, consumers are not required to use their entire settlement check on repairs, said Mitch Wilson of the Ohio Insurance Institute. The check is written out to you and your mortgage holder. It's then up to you how to use the money to complete the repairs.)
This same homeowner had second thoughts after agreeing to an out-of-state contractor and decided to call a local business. When the homeowner called the original contractor to tell him he wanted to cancel within the three days according to state law, the contractor told him that if he couldn't have the cancellation in his hand within three days, he'd owe $2,200 to cancel. And conveniently, the contractor was out of town for the next three days.
Luckily, this consumer got advice from the local roofer to go notarize a cancellation letter at the bank within the three days. When he called the contractor to tell him, the contractor said some choice words and hung up the phone.
But had the consumer not known to stand up to this contractor, or had it been an elderly person worried about the threat of the $2,200 cancellation fee, that person probably would have stayed with the contractor out of fear.
Know your rights. In the state of Ohio, you have three days to cancel any contract that is brokered at your house. However, the law is a bit vague in the manner that the notice has to be given. If the contractor has specifics on cancelling a written contract, you have to abide by that, said Ohio Attorney General spokeswoman Michelle Gatchell.
The bottom line, though, is not to be bullied. If you disagree with a cancellation procedure, contact the attorney general's office for help.
Said Wilson, of the Ohio Insurance Institute, the trade group for the property and casualty insurance industry: ``You have to do your homework. You can't just say OK to the first person who comes to your door.
``If they're trying to pressure you for an immediate decision, don't do it. You want to make sure they have a contract. A lot of them won't have a contract, but just an invoice with prices scribbled down,'' he said.
Also, check local references of other jobs, not references from out-of-state jobs because that could just be someone being paid to answer a phone and give a good reference. Try looking in the phone book to confirm that a local reference is a real person and not just someone paid to say nice things.
It is unfortunate that consumers have to essentially be on the defensive when it comes to finding ethical and good contractors, because we all know there are lots out there that are great, but also many who give the rest of the industry a bad name. Complaints about home-improvement contractors are usually among the top reported to consumer groups.
Of course, you can do everything right and do all your homework and still get a bad contractor or a bad experience. If that happens, contact the local and state consumer advocates for help.
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@ thebeaconjournal.com.
s been more than a month since the damaging hailstorm of June 8, which ripped through portions of our area, but homeowners dealing with the aftermath are still feeling its effects -- and that might continue for the next year.
That's because in addition to thousands of homeowners scrambling to get their vehicles and houses repaired, unfortunately lots of scam artists or less-than-ethical contractors have also flocked to the area looking for quick jobs.
It's always an unfortunate certainty that unethical business people try to take advantage of other people's bad circumstances, especially after natural disasters.
Consumer advocates and I are already hearing about people who have been taken. It's heartbreaking as always. But now, especially, consumers need to do their research and make decisions with a clear head.
Don't let scammers feed off your panicked emotions -- or your insurance settlement checks.
``You have to be responsible for your own actions,'' said Vic Wlaszyn, president of the Akron area Better Business Bureau. Wlaszyn said he's heard and seen people signing blank contracts with contractors.
``That's a huge no-no. You should not do that. What they're telling the homeowner is, `You just sign the contract, we'll take care of everything else.' These are very sophisticated people. These are `storm chasers' that do this for a living,'' Wlaszyn said.
One of the problems from this storm is the large number of people who were affected.
According to a study released on Thursday by the Ohio Insurance Institute, insurers are expecting at least 29,219 claims totaling more than $105 million to be filed from the hailstorm, which mostly hit Springfield Township, Ellet, Mogadore and a small portion of Portage County.
To put it in perspective, the 2002 tornado and hailstorms that ripped through Jackson Township and North Canton resulted in $38.2 million in insured losses. June's hailstorm is the fourth costliest in the state. A storm in Central Ohio last October was the most costly at $239 million.
Wlaszyn estimates there are probably 50,000 homes that were hit.
So obviously that's a lot of roofs that might need repairs.
What's happening is many roofing contractors are going door-to-door trying to get roofing jobs. They're promising good prices but not following through with good service or products or warranties. Others are asking people to put a sign in their yard to keep would-be contractors away until the settlement check comes in so they can have the job.
Adding even more confusion to the mix are reports from the Better Business Bureau that out-of-state contractors are partnering with local businesses, both BBB members and those who are not, to operate under their name. But in some cases, Wlaszyn said, out-of-state contractors are less than ethical and bring down the reputation of local businesses with shoddy work. Even worse, Wlaszyn worries that in months or years when the shoddy work starts to fail, the out-of-state contractors will be long gone. Then consumers won't have any recourse. If a local business were a partner, it might be left trying to pick up the pieces without the funds to do it.
That's certainly not to say that all out-of-town companies or roofing contractors are scam artists. Far from it. There are plenty of out-of-state companies who specialize in repairs after a natural disaster and know what they're doing. But as with anything, there are plenty of ``bad apples'' -- many of them out-of-staters -- who come looking for a quick and easy job that will eventually leave the consumer holding the bag.
I've heard of one homeowner who was approached by several contractors who did not want to give estimates on the roof job, but just wanted to know the amount of his insurance settlement check. Conveniently, their bid was for $7,000, the amount on the check.
That's definitely not the way to go. Don't show a contractor your insurance check or tell them the amount. Have them give you a fair estimate that you can weigh against other estimates to make your decision.
In the above example, a local contractor is doing the job for about $1,600 less. (By the way, consumers are not required to use their entire settlement check on repairs, said Mitch Wilson of the Ohio Insurance Institute. The check is written out to you and your mortgage holder. It's then up to you how to use the money to complete the repairs.)
This same homeowner had second thoughts after agreeing to an out-of-state contractor and decided to call a local business. When the homeowner called the original contractor to tell him he wanted to cancel within the three days according to state law, the contractor told him that if he couldn't have the cancellation in his hand within three days, he'd owe $2,200 to cancel. And conveniently, the contractor was out of town for the next three days.
Luckily, this consumer got advice from the local roofer to go notarize a cancellation letter at the bank within the three days. When he called the contractor to tell him, the contractor said some choice words and hung up the phone.
But had the consumer not known to stand up to this contractor, or had it been an elderly person worried about the threat of the $2,200 cancellation fee, that person probably would have stayed with the contractor out of fear.
Know your rights. In the state of Ohio, you have three days to cancel any contract that is brokered at your house. However, the law is a bit vague in the manner that the notice has to be given. If the contractor has specifics on cancelling a written contract, you have to abide by that, said Ohio Attorney General spokeswoman Michelle Gatchell.
The bottom line, though, is not to be bullied. If you disagree with a cancellation procedure, contact the attorney general's office for help.
Said Wilson, of the Ohio Insurance Institute, the trade group for the property and casualty insurance industry: ``You have to do your homework. You can't just say OK to the first person who comes to your door.
``If they're trying to pressure you for an immediate decision, don't do it. You want to make sure they have a contract. A lot of them won't have a contract, but just an invoice with prices scribbled down,'' he said.
Also, check local references of other jobs, not references from out-of-state jobs because that could just be someone being paid to answer a phone and give a good reference. Try looking in the phone book to confirm that a local reference is a real person and not just someone paid to say nice things.
It is unfortunate that consumers have to essentially be on the defensive when it comes to finding ethical and good contractors, because we all know there are lots out there that are great, but also many who give the rest of the industry a bad name. Complaints about home-improvement contractors are usually among the top reported to consumer groups.
Of course, you can do everything right and do all your homework and still get a bad contractor or a bad experience. If that happens, contact the local and state consumer advocates for help.
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@ thebeaconjournal.com.