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In the aftermath of a violent storm, homeowners anxious to get repair work underway can be vulnerable to aggressive contractors who knock on their doors offering quick, costly deals, insurance executives and legislators say.
These high-pressure contractors who follow natural disasters and lure people into signing costly contracts before insurance adjusters arrive are known as storm chasers, or as Mark Johnston, government relations manager for 10 Midwest states for the National Association of Mutual Insurance Companies calls them, "storm scammers."

The Iowa Legislature is considering a bill that would rein in those contractors. The bill is part of a growing movement against the practice across the Midwest over the past two years. Minnesota, Illinois, Missouri, Nebraska and South Dakota have passed similar laws, Johnston said, and Wisconsin and Kansas have considered such bills.

The Iowa bill would void repair contracts signed when the contractor represents himself as working for an insurance company, promises to rebate a deductible, or fails to give customers a disclosure about how to cancel the contract. The Iowa Senate added a provision last week giving the state attorney general the authority to prosecute contractors under consumer fraud law.

Bill Good, executive vice president of the National Roofing Contractors Association, said "there's no question" storm-chasing is a problem. Consumers, he said, need to make sure the contractor is licensed if their state requires it, and that the company has a permanent place of business. Consumers should not pay cash and should not sign documents authorizing the contractor to negotiate directly with the insurance company.

"There are some very good contractors who set up their businesses to be able to respond to storms, but there are good ways to do it and bad ways to do it," Good said.

Bruce Boock of Johnston, Iowa, recalls a 2009 midnight hailstorm. Within 48 hours, a contractor was knocking on his door, says Boock, who works for an insurance company. Boock had seen signs for a roofing company pop up in his neighborhood. They listed a Des Moines address, but the contractors' trucks had Minnesota license plates, he said.

"I told him that I was a claims manager at a local insurance company, and he just walked away," he said. Boock estimates 30% of his neighbors replaced their roofs, some unnecessarily.

Not all contractors who arrive quickly on the scene after a storm are dishonest, says Chip Baltimore, the state representative who wrote the Iowa House version of the bill. The House amended its version of the bill to remove a provision giving customers the right to cancel a contract after the work is done if their insurer denies their claims. That would have gone too far, Baltimore said.

"My dad's a contractor. I don't think that the validity of his contracts should be determined by the homeowner's insurance company," Baltimore said.

Insurance officials say dishonest contractors generally flee from states where they're outlawed.

Courtesy:  usatoday.com
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