Property owners often find themselves the victim of contractor fraud. In 2022 alone, the Federal Trade Commission reported a total of 70,612 home-related fraud cases.
Of all the areas of a building scammers can target, the roof is often the most vulnerable. This area is often expensive to repair and hard to access without the proper tools, making it easy for scammers to lie about or cause damage without the owner finding out.
Roofing scams are preventable, however, and in this article, we offer expert tips from the insurance fraud team at Central to help you identify, prevent, and respond to this type of fraud.
JUMP AHEAD | How to Protect Yourself from Roofing Scams
How Roofing Scams Work
Fraudsters who complete roofing scams are looking to receive a financial payout.
In some cases, this money will come from the property owner directly for promised services that are never completed. In other situations, the fraudsters will follow the scam through to the claims process and have a property owner submit work for reimbursement from their insurance carrier that is either exaggerated, over-priced, or, in some cases, doesn’t even exist. In these cases, the scam turns into insurance fraud and can have detrimental outcomes for the property owner and insurance company.
Though all contractor fraudsters share the goal of stealing money from property owners, their approach to the scam can vary.
Some may knock on your door and claim they noticed damage to your roof when working on a neighbor’s and ask if you’d like them to do an evaluation. Others will seek out entire neighborhoods that have experienced a natural disaster like a tornado or hail storm and offer assistance in repairing roof damage (whether real or imagined.)
No matter their approach, these scammers can be very dangerous, so it’s important that you, as a property owner, are on high alert for any suspicious behavior.
7 Warning Signs You’re Being Scammed
Here are seven key warning signs you are the target of a roofing scam:
1. They Offer a Low Starting Bid
Beware of quotes from a roofer that are substantially lower than other contractors. Scammers often offer low cost work to get you on the hook, then start finding problems that greatly increase the price. This might include a need for more materials, more time to repair, more workers, etc. Other scammers might try to increase the project’s costs due to materials suddenly increasing in price.
While unforeseen problems can legitimately happen on the job and costs of materials can fluctuate, the contractor should not try to raise material costs in the middle of your project. Be sure to do your research on an organization, get quotes from more than one company before signing anything, and remember, if it sounds too good to be true, it probably is.
2. They Create or Exaggerate the Amount of Damage
Another common tactic for shady contractors is to exaggerate or create roof damage themselves. For instance, someone may stop by and offer a free inspection of your roof, then purposely enhance or create damages themselves.
Avoid falling for this by contacting your insurance agent before allowing anyone onto your roof.
Central policyholders, for example, have access to an industry-leading fraud identification system that utilizes data from the Geospatial Insurance Consortium to combat cases of roof insurance fraud. This group takes low-altitude, high-resolution aerial photos of policyholders’ property to help track damages and provide a historical look at a roof’s well-being.
Having access to this kind of ongoing documented footage not only gives policyholders insight into the merit of any claim of damage a contractor makes but can also be crucial in helping fight a case of insurance fraud if they succeed in scamming you.
3. They Ask for a Large Down Payment or Full Upfront Payment
It should be a red flag if a contractor asks for a large down payment or full payment upfront before completing—or in many cases even starting—work on your roof. In many cases, this is a tactic to take your money and leave without ever touching your roof.
4. They Use High-Pressure Tactics
Contractors that offer you a special deal if you pay upfront or sign a contract within the next day or hour likely have ulterior motives. This is a pressure tactic to try and get you to make a rash decision without thinking it through or checking with your insurance carrier to ensure they’re a legitimate company.
Don’t let a contractor convince you to move at a pace you’re uncomfortable with, and always make time to do your homework before signing anything or handing over cash.
5. They Use Cheap or Substandard Materials
Fraudsters may seek to maximize their profits by using the cheapest materials to make repairs. In these cases, the repairs they make are often only cosmetic and do not address any underlying problems with your roof. Instead, the contractor is likely charging you full price to cover up the problem, which will end up costing you more money in actual repairs in the long run.
6. They Seem Overly Interested in Your Insurance Coverage
If a roofer asks lots of questions about your previous claims or assures you that a claim for the project at hand will be honored by the insurance company prior to filing it, this is a clear sign of fraud. In these cases, the contractor is often planning to commit insurance fraud and pocket cash at your insurance company’s expense.
A contractor may attempt to commit insurance fraud by creating two invoices for your home’s repairs, including a lower-cost invoice for the consumer and a higher-cost invoice for the insurance company. In other cases, the contractor might promise that by overbilling the insurance company, he will reimburse your deductible.
This is insurance fraud, and it could cost you significantly. Your claim could be denied based on fraud and misrepresentation and could even result in prosecution.
The Bottom Line: If a contractor offers to pay your insurance deductible, do not hire them. This may be a red flag that they are planning to commit insurance fraud.
7. Your Home Experienced Recent Storm Damage
Storms draw dishonest contractors like moths to a flame. These contractors are called “storm chasers,” and they travel to areas that have recently experienced bad weather.
Commonly, these contractors initiate contact with a simple knock on your door or a flyer in your mailbox offering to repair or replace your roof. They may mention they were repairing a roof in your neighborhood and can give you a discount. Or, they may try to convince you that they can replace your roof, even if you don’t need it, by filing an insurance claim.
Be cautious—even if these contractors do some work before disappearing with your payment, the result will likely be substandard, and the lifespan of the replaced roof may be half or less of a well-constructed roof.
How to Protect Yourself from Roofing Scams
While it can be overwhelming for homeowners to learn the extent to which a fraudster will go scam you, there are steps you can take to protect yourself from potential roofing scams. Below we outline seven top tips for staying ahead of scammers.
Tip #1: Stay Informed
Follow insurance carriers like Central on social media for the latest updates on scamming trends and tips on staying diligent.
Tip #2: Get Your Insurance Agent Involved
Always call your insurance agent if you need repairs or a new roof. Let them help guide you to a reputable company or, at the very least, evaluate the damage beforehand.
Did You Know: Companies like Central have advanced systems to track fraudulent contractors. With this system, your agent can tell you if there are any known cases of fraud attached to the contractor or business bidding on your work.
Tip #3: Know and Share the Warning Signs
Review the list of the seven most common warning signs above, then pass the information on to friends and loved ones. Data shows the elderly are most often duped by insurance fraud like this, so help protect them by reminding them of the risks.
Tip #4: Do Your Homework
Always review a contractor’s reputation—either with your insurance agent or online—before agreeing to work with them. You should also always get estimates from more than one contractor for any damage in your home to ensure there is a commonality in pricing and no one is trying to overcharge you.
Generally, it is best practice to only work with licensed and bonded contractors. Before starting roof-related work, ask for copies of a contractor’s documents and references. Though it may feel high-maintenance or overly cautious, you will be grateful you took the time to verify they are a contractor in good standing.
Pro Tip: The Better Business Bureau is a great place to check for other homeowners’ experiences with a specific contractor.
Tip #5: Always Get a Written Contract
Ask for a contract that clearly documents all the proposed work to your property and the prices they are charging; never sign contracts with blanks in them.
Having written documentation of the intended work will not only prevent a shady contractor from making any drastic changes to price or scope after the fact but can also demonstrate their intentions in court if they end up being fraudulent.
Tip #6: Never Pay a Contractor Before Work is Completed
No matter the situation, if a contractor asks for payment at the start of a job, it can be considered a red flag. Even if you feel the contractor is reputable, double-check with your insurance agent before paying them prior to work. Otherwise, they may disappear with your down payment without ever beginning the job.
Remember: Never sign a completion certificate until the work is finished and is confirmed to be up to code.
Tip #7: Say No If You’re Uncomfortable
If your instincts tell you something doesn’t feel right, listen to them. Don’t feel like you have to be overly polite, and don’t let them pressure you into making a decision you’re not comfortable with. You always have the power to ask for time to consider your options before agreeing to services.
Roofing Scams Can Drive Up Your Insurance Rates
Follow these expert tips from Central to protect yourself, prevent contractor fraud, and keep your insurance rates low.
If you suspect your contractor is involved in insurance fraud, please contact The National Insurance Crime Bureau at 800.Tel.NICB (800.835.6422) or get in touch with your Central agent today.
