10 ways to avoid contractor scams (© moodboard/Corbis)

© moodboard/Corbis

Thousands of people will be rebuilding or dealing with repairs as a result of nature's most recent bad behavior, otherwise known as Hurricane Irene. Unfortunately, natural disaster and the devastation it wreaks on our homes is the cue for con artists and grifters to move in.

Phae Howard of the National Center for the Prevention of Home Improvement Fraud, a nonprofit dedicated to helping homeowners avoid rip-offs, and Lanard Cullins, disaster inspector for the Federal Emergency Management Agency, say there are many things people can do to make sure they aren't victimized. Among their tips:

1. Get four references. Contractors will come prepared with three references. Ask for four. And for the fourth one, ask that they provide someone who had to call them back to fix a problem with the work. If the contractor fixed the problem to the homeowner's satisfaction, then you have a good idea of what kind of work the contractor does and whether he follows up until the homeowner is satisfied.

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2. Take precautions if you live alone. If you live alone, have a family member or friend at your house when you meet with potential contractors. You don't want to advertise that you live alone, particularly if you are a woman or a senior citizen. Have a relative, friend or adult male acquaintance present. Before the contractor arrives, secure all of your valuables, including paperwork that could facilitate identity theft. After the contractor leaves, check all of your doors and windows to make sure they're still locked so no one can return later and gain easy access.

"We're not saying all contractors are dishonest — the majority of them are just the opposite. It's just that some dishonest people pretend to be contractors," Howard says.

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3. Check with the Better Business Bureau. Check out potential contractors by checking not only your local bureau but also the bureaus in surrounding states. This is particularly important after large-scale natural disasters, when itinerant work crews often move into an area.

4. Verify contractors' licenses. Separate the legitimate contractors from the phonies by checking their licenses and local operating permits.

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"Verify them through the secretary of state's office in whatever state they're licensed to do business," Cullins says. You should also check with authorities to make sure the contractors have complied with local laws.

5. Check contractor coverage. Make sure the contractor has proper coverage, such as surety bonds, performance bonds and worker's compensation. Howard recommends turning to your insurance agent for help.

"Wrestling with all those details on top of the devastation is a lot; your insurance agent will decipher his coverage for you," Howard says.

6. Ask your insurance agent. Another question for your insurance agent: What happens if supplies or equipment are stolen from the job site? Will the contractor's insurance cover such thefts? If so, make sure you not only obtain the contractor's insurance information but also check to make sure his insurance is in full force and is current.

7. Need supplies? In an ideal situation, the contractor should buy the supplies, Howard and Cullins say. But if you do purchase them, don't give the contractor your money. Instead, meet the contractor at the supply store and make the purchase, then have it delivered to the site the day the materials are needed.

8. Deal with your insurance company yourself. In most cases, you should be the one to communicate with the insurance company, not the contractor. Cullins says some contractors will tell you they can negotiate more money from the insurer, but it could be a way to bilk you.

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Howard adds that while not all contractors who communicate with insurers are scammers, the consumer should take charge of the claim. Often, homeowners have other losses associated with a disaster claim, such as loss of personal property, as well as relocation or additional living expenses, so it would not be in the homeowner's best interests to allow a contractor to deplete the total claim amount.

"Your insurance contract is between you and the insurance company, not the contractor," she says.

9. Hire an inspector. If you don't know a joist from a rafter, how will you know your contractor is telling you the truth about the work that's needed or if he's doing a good job? You have two options: your local government building-codes department or an independent building inspector. Once the contractor pulls the permits, the code inspector will check on the project to make sure it's being built to code. You can also hire a building inspector before and after the project to help you determine what needs to be done and whether it's been done properly.

10. Proofread your contract. Have a contract with start and end dates and have an attorney check it out.

"Never sign a contract without all of the blanks filled in," Howard says.

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When homeowners struck by disaster lose money that was meant to replace or repair their homes, they often walk away from the whole thing, leaving the lender holding the bag. Before you compound your bad luck, make sure you're dealing with a qualified, reputable contractor. For more information, contact either the home-improvement fraud center or FEMA.

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