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How to avoid home contractor scams

While most contractors are honest people, there are some fraudulent ones out there looking to take advantage of homeowners. But you don't have to fall victim if you know how to protect yourself and know how to hire reputable workers.

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Unfortunately, there are some shady contractors out there looking to scam you out of your money while providing little or inadequate home work in return. However, there are some obvious red flags you can look out for — and steps you can take — to help protect yourself from potential scammers and con artists.

Avoid cold calls and do your research
If you ever get a random phone call or a causal knock on the door from a person claiming to be a contractor, beware. They may not be who they claim to be.

They may demand money upfront in the form of a cash deposit, or perhaps there missing a local address (steer clear of P.O. boxes or hotel addresses). And certainly, if their vehicle does not have their name or company name on it, they likely lack legitimacy.

Be sure to do your research online before handing over any kind of payments to these would-be contractors.

Check with your insurance company
Make sure the work is covered under your homeowners insurance. Your insurance company may send an adjuster to look at the damage and decide what repairs need to be made, and at what cost.

If you have already gotten a damage bid or a contract, ask your adjuster to look at it first. Keep in mind the insurance company will pay only what the adjuster approves.

Get estimates in writing
Do not sign a contract unless you have a written estimate; this includes a list of all repairs and prices for each, as well as labor and material costs. Your estimate should be on the company's letterhead with clear contact information.

Estimates should also be free. Stay away from contractors that ask you to pay for their bid and be sure to get a few different estimates.

Don't pay up front
Never pay for the entire project up front. Some contractors might want a portion of the money to get the work started, but this should only be a small deposit. Make your final payment only after the job is completed. If you can, pay with a credit card because they come with fraud protection. Never pay in cash.

Check their licenses and insurance
Ask to see any state or local licenses. A license should have a number attached to it; write it down, then call the appropriate licensing authority to make sure it's legitimate.

Get a signed contract
Make sure you get a contract that's filled out correctly with no empty spaces to ensure a scammer does not fill those spaces in later. If you don't understand the language, or if the contract is open-ended or ambiguous, don't sign.

Once your contractor finishes the job, inspect their work. If it does not match what is in your contract, ask that the problem areas be fixed.

If you think you're working with a fraudulent contractor, seek help. You can contact your state's insurance fraud office, the Better Business Bureau, your state's insurance commissioner, your state's consumer protection office, or the police.

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