Insurance Fraud?

bandsq

Im new to contracting and this site.

A huge storm hit here and Im coming in contact with a company trying to steal potential clients.

They are overinflating the claim so the customer doesnt pay their deductable NO money out of their pocket!

What can be done about this?

Im telling my clients they have to pay their deductable - there isnt any other legal way is there?

Can I turn them in for fraud?

Thanks

Ed the Roofer

Innuendo is not proof. You would have to provide the paper trail.

It is illegal, but I doubt you would get the home owners to cooperate, since they are taking advantage of the system.

Also, the claims can not be artificially inflated. There are software programs that the insurance companies use to check the figures with and to go ove those amounts they need to do a supplement and validate why it was done.

Ed

tnt specialty

One in the same as the common practice of misrepresenting employees as "subs"...It's illegal, but goes on in plain view...

That's just the degenerative nature of the biz.............

Brock

General practice now is that the isur. co. pays the H/O the claim minus the deductible and deprediation. The H/O can pocket the money or decide to have the work done. Most times the amount received more than covers the repair. Often is does not. When this happens most people will get three estimates from the larger roofing companies and resubmit getting a higher settlement. The firm you are speaking of is most likely a "storm chaser". They are experts on how the ins. money works and these guys set up shop anytime a decent storm hits a community. the good news for you is that there will be more work than you can shake a stick at. More than likely your local news companies will run a story on these fly by night storm chasers and folks in your area will be more inclined to use a local guy like you after they see a few of these newscasts.

dougger222

Insurance companies know that contractors paying deductibles goes on all the time. I've seen storm chasers put up signs saying they'll upgrade and pay deductibles up to a certain amount. One contractor put an add in the paper saying he'd pay up to a $2K deductible.

Insurance comanies would rather have a customer pocked insurance money than falsify a claim or make two claims without work being done.

I've had adjusters hint to the fact that I was going to pay the home owners deductible. I've also had adjusters that would have paid just about any estimate I handed them. One was on a million dollar house and the home owner payed $250K a year in insurance to the company. To the insurance company they figured if this guy wants a roof give him one and if he wants to use this contractor pay him what he wants. The adjuster was quoted saying, "We don't want to loose this guy". He insured his house, vehicles and manufacturing plant/workers with them.

I'll upgrade to laminates on every job but won't pay the deductible. One angle is to shave a few bucks off the deductible by putting a sign in the yard for a certain period of time. An agent I know who runs by the books said this is ok.

What I can't stand is home owners with second rate insurance companies who time and time again are a pain to work with.

dougger222

Depending on the age of the roof depends on how much the first check is for. If it's a brand new roof the home owner will get a check fairly close to what the adjuster has figured into the repair/replacement. If it's a really old roof the first check some times won't even cover materials.

Then you have mortgage companies on checks and what I really like is when I see my name on the insurance checks. One of the big insurance companies now will pay 100% of the claim with a signed contract with a licensed contractor. However they will never put a contractor on a check.

Some home owners have gotten the whole claim amount with a five year old roof with no mortgage companies on it.

Banks are really toughing up on insurance claims. If there is moneys owed for back house payments the banks get first dibs at this money. A lot of banks are now putting the money in escrow and paying only after a few forms are filled out by me. Banks have always done this on claims over $20K but just last week had to go through this on a $9K roof. They are releasing the first 1/3 payment after I fax them a copy of the permit.

Last year one bank held onto a check for $14K for four months.

90% of my work in the past two in a half years has been insurance claims. Right now have about a dozen sold and working on another dozen claims already from this Spring. Don't go door to door or advertise to get them. My repeat home owners get them for me!

bandsq

Thanks for the response.

Getting a little aggitated at H.O. telling me they are going with the other guy because they dont have enough money to pay the deductable!

Hope there are chances for me to fix these storm chasers mess!

Brock

Have you had the "Texas Caravan" yet? Expect thousnads of illegals to swarm your area from Texas and Illinois. All the big roofing companies will be using them. You better get off your tail and get with the program. Join the movement or be left out. Bid 'em to get 'em and use the illegals to install them. Get 500 yard signs printed out this week and spend a week shoving them in at every intersection and subdivision entrance. You'll me a millinaire before all the roofs are finished. Good luck and God speed.

dougger222

The last thing I want is an out of state or country crew putting on roofs under my name.

Umm, no thanks, I'll umm pass...

It's taken me 10 years to build a reputation without advertising I don't care how much I could make off Mexicans/hail claims.

My crew gets paid about double what Mexican crews get. They do top notch work and they get paid accordingly.

Am I rich? No. Do I live comfortable? Absolutely!!!

It's going on two years now since the big 06 hail storm which has left many home owners with roofs that won't stop leaking. A good number of home owners learn the hard way that going with an out of town contractor is about the worse choice they can make.

MJW

Sorry dude, can't believe you. Nobody in MN makes good money having real employees and a crew. Subs or doing it yourself is the only way legally.

Been doing this for years with 2 people pulling in $250,000 net and barely making it sometimes. The illegals take a ton of jobs from us up here, mainly because the HO's are cheap and want to pocket money from their Ins. Which is fraud, but there is no one to enforce it.

dougger222

It helps when you get $300-500+ per square. The roof yesterday was a 5/12 one layer rip and paid $395 a square. Last year with just one crew the labor charges were around $350K. Worked 8 months out of the year. Not numbers to get rich off but numbers to live a comfortable life. When I did just new roofs made around $100K per year in labor though, working alone.

I talked to an operator at the dump yesterday for a while and he told me about a friend of his who owns a roofing company in MN who most would consider "rich". He owns farms and large tracks of land all over the Twin Cities and none have mortgages. He's in his 50's and works everyday on the roof. He could retire at any point but I guess he likes roofing. 30 years with a good name roofing houses can make you rich. There is a family run company up the road from me who does flat roofing and from what I've heard from friends of them the family is very rich. They have been in business since the 1920's though! They don't advertise either.

JimmyJohn

I am a "storm chaser". My roofers are subs and I tell my clients/prospects they are. The foreman of my crew has 23 years of experience (he is also from Mexico and in the USA legally) and he does excellent work. He has been a sub of mine for 7 years. I give all my clients my home address and phone number to contact me if they ever have an issue. There are many storms we have worked in which the "local" roofers could not possibly have installed all the roofs needed to be installed (there's only so much time the home owner has to complete the work in order to get all the money). I always ask the customer to not show me his/her insurance scope so I can give them an objective quote. My quotes are usually higher than what the insurance company said they would pay. If I was in a competitive situation, I wouldn't be the cheapest quote. If you do good work, ask for top dollar. The insurance companies will only pay so much regardless of what you ask for. I began "chasing storms" to survive. It's an excellent way to always have work. There are certainly "out of town" crews that do %^$#@ work, but not all of them. As far as paying the deductible for them, it's okay for me to give away some of what would otherwise be profit. I had to speak to an insurance investigator because one of my IDIOT salesmen requested a supplemment in a manner that looked suspicious (and it did look suspicious, the salesman was stupid). I cleared several questions with the investigator and the deductible issue was one of them.

JimmyJohn

I am also licensed, bonded and insured.

Ed the Roofer

Are each of your subcontracting crews also licensed, bonded and insured as well?

Ed

dougger222

A few nights ago the local news ran a special about home owners getting burned by storm chasers. The two biggest problems are leaking roofs (that didn't leak a drop before the storm chasers) and money paid out without the work being done.

JimmyJohn

I admit I don't request a certificate of insurance as often as I did in the past, but as of the end of last season (and all the years prior), he had insurance. I only use one crew. I have considered expanding, but I stay busy already. My target market is 70+ squares. I can usually keep the crew busy through the entire season.

Ed the Roofer

If your state you are working in requires roofing contractors to be licensed, then a subcontractor who is contracted to do the roofing installations most likely also needs to be licensed, insured and bonded.

Otherwise, they are most likely misclassified as subs, when in reality, they are employees, even though they work off of an agreed to sum for the jobs or square counts they do.

Ed

dougger222

If the "crew" only works for you than they are your employees. Even if they have their own insurances if they work a certain percentage for only one person or company they become employees. Don't know what that percentage is but I bet Ed knows it, he knows most everything.

In MN a sub doesn't have to have a license, just the general contractor or roofing contractor.

Back to the orginal post.

When you say the competition is over inflating the price what do you mean by that? They are more than likely higher than you by using insurance estimating software. If you are not using the same program your competition is you are losing out on thousands of dollars. If they can do why can't you? Invest in a program and learn how to use it.

In addition to getting more money from the insurance companies you will both speak the same language. I use Xactimate but there are other cheaper softwares out there.

MJW

Any roofing sub or contractor is to be licensed in MN. You can be a siding sub though under a General and not have to be licensed.

1967 chevell

I run my organization on the side, myself and my employees all have good jobs with good insurance. They all "help" me out and get paid cash. Now I have liability insurance incase a ladder falls in a window but how about personal injuries if someone gets hurt? I Am also licensed.