State law aims to protect against contractor fraud

By: Associated Press June 23, 2014 10:53 am

Crews with FGS Restoration clean up damage to a home along Spaight Street after it's roof was blown off during an overnight storm which toppled trees and damaged properties on the Near East Side of Madison, Wis. Tuesday, June 17, 2014. Officials have declared a state of emergency in Dane County in order to make storm damage recovery assistance available to residents who need it. (AP Photo/Wisconsin State Journal, John Hart)

Crews with FGS Restoration clean up damage to a home June 17 in Madison. A new state law aims to protect homeowners against unscrupulous contractors who offer to repair types of storm damage. (AP Photo/Wisconsin State Journal, John Hart)

MADISON, Wis. (AP) — There’s a new state law that aims to protect homeowners against unscrupulous contractors who offer to repair the sort of storm damage that occurred last week in southern Wisconsin.

The law’s provisions seem to protect insurance companies as much as homeowners, the Wisconsin State Journal reported. But Sandy Chalmers, an administrator with the state’s consumer-protection agency, said preventing insurance fraud helps consumers as well.

There are already laws that protect consumers, she said, but fraudsters were using loopholes to take advantage of insurers as well, she said.

Fraudulent contractors descend on storm-ravaged areas and offer cheap rates, often assuring the homeowners the work will be covered by insurance. Then they do shoddy work or disappear with the money, and the homeowner later finds out insurance won’t pick up the tab.

Under the new law, contractors can’t promise to pay a homeowner’s property-insurance deductible, nor can they negotiate with insurers on the customer’s behalf. Those were steps that fly-by-night contractors would use to entice homeowners to sign a contract quickly, without giving them time to research the contractor.

“It’s a misrepresentation in many cases, and it just gives us another violation to charge these criminals with,” she said.

The law also gives homeowners the right to cancel the contract within three business days of finding out their insurer has denied any part of their claim for the work.

The state urges homeowners to be cautious about hiring contractors. Consumers should ask contractors for references and seek referrals from friends and neighbors, Chalmers said. They should also consider hiring local companies and ask to see contractors’ state-issued registration cards.

Information from: Wisconsin State Journal, http://www.madison.com/wsj