What is contractor solicitation and how does it work?
Here's the scenario:
You are approached at home (solicited) by a contractor who offers you payment or a gift card to conduct a free inspection of your roof. Upon completing the inspection, the contractor advises you of damage to your roof.
You have never noticed the damage but you trust the contractor as a professional. The contractor states that your roof is badly damaged and that you need a new roof.
He states that your insurance company will cover the cost and there is no expense to you and fails to inform you that you will be required to pay your deductible. He promises to communicate directly with your insurance company and handle the claim on your behalf.
The contractor asks you to electronically sign a document on a tablet authorizing the work on your roof. The contractor scrolls to the signature area of the document and you sign.
Unbeknownst to you, you do not need a roof replacement; however, you have signed an Assignment of Benefits*, a legal contract that transfers your insurance rights to the contractor. This authority allows the contractor to file an insurance claim on your behalf, receive direct payment of your insurance payouts, file a lawsuit against the insurance company and more. Because you signed the form electronically, you do not have a copy and do not know exactly what you’ve signed.
The contractor may charge the insurance company an unnecessary or inflated amount for the roof.
The contractor may never complete the work but is still able to be paid by the insurance company due to the requirement included on the contract you signed.
The contract may also limit you from communicating directly with your insurance company, which means, if you have questions about the insurance claim, you will not be able to ask the company.
Oftentimes, these fraudulent, possibly unlicensed, contractors target neighborhoods and take advantage of multiple homeowners. The contractor may complete the roof of one home to use as an example or proof to other homeowners.
If you or someone you know have been a victim of contractor fraud, contact the Florida Department of Financial Services' Criminal Investigations Division to report the incident. Contractor fraud is illegal and can lead to an arrest and prosecution.
- DFS Fraud Hotline: 1-800-378-0445
- DFS Online Fraud Reporting Portal: https://First.FLDFS.com
This deliberate deception is insurance fraud perpetrated by a contractor = contractor solicitation fraud.
* Any policy that was issued prior to January 1, 2023, provides a policyholder with the right to assign insurance benefits to a 3rd party as long as you have not chosen to give up that right in order to receive a premium discount.
To learn more about contractor solicitation fraud and how you can protect yourself and your neighbors, review the components of Demolish Contractor Fraud: Steps to Avoid Falling Victim.
What's Right and What's Wrong?
How to tell if a contractor is breaking the law:
WHAT'S RIGHT | WHAT'S WRONG | ||
 | Require consumer to pay insurance deductible |  | Waive an insurance deductible or offer services at no charge for filing an insurance claim |
| Advertise construction services to potential clients including the requirement that the consumer pay their deductible | | Mislead consumers using untrue or deceptive advertisements |
| Discuss, explain and offer a quote for construction or repair of property | | Initiate, negotiate or influence the filing or settlement of an insurance claim on behalf of a consumer |
| Obtain a building permit from local officials, as required | | Construct or repair property without the appropriate permit or disregard local ordinances |
View the complete list of permissible and prohibited actions by a contractor and the violations involved:
Contractor Prohibitions
What constitutes fraud?
Fraud of any kind impacts both the victims and the industry its perpetrated against. Per the Insurance Information Institute, “insurance fraud is a deliberate deception perpetrated against or by an insurance company or agent for the purpose of financial gain. Fraud may be committed at different points in the transaction by applicants, policyholders, third-party claimants, or professionals who provide services to claimants.”
How does fraud impact consumers and the insurance industry?
According to the Coalition Against Insurance Fraud, insurance fraud costs at least $308.6 billion per year and occurs in approximately 10% of property and casualty claims. Insurance fraud tactics and schemes result in insurance companies paying higher negotiated settlements or paying additional costs to litigate these claims. Those expenses are typically passed on to consumers in the form of:
Increased Insurance Rates
- The average homeowners premium in Florida is $3,600.
Lack of Availability
- Companies are restricting underwriting guidelines and excluding coverage for specific damage
Increased Mortgage Payments
- Increased insurance rates included in escrow account resulting in an increase in mortgage payments
When an insurance company pays a contractor for work, the homeowner expects the contractor to complete the work in a manner that is of high quality. If a contractor receives an insurance payment and abandons the job, intentionally does poor quality work or uses subpar materials, the contractor is committing insurance fraud. These acts of insurance fraud can impact you, as a consumer, significantly. If your home is left unfinished, you may have to pay out-of-pocket to complete or re-construct the repairs. Additionally, more damage can occur as a result of poor work or subpar materials used. An insurance company will not pay for the same damage twice - if you, or a third-party on your behalf, file an insurance claim for damage for a specific timeframe, the insurance company will not pay to repair that damage again.
Do your due diligence before hiring a contractor.
Review Consumer Tips and Red Flags to decrease the likelihood of working with a contractor looking to commit insurance fraud.
The Department of Financial Services' Check My Contract service assists residential or commercial property insurance policyholders who have entered into a repair contract with contractors, restoration professionals, or public adjusters related to an insurance claim, protect themselves from insurance fraud.
Check My Contract allows you to submit repair contracts to DFS for independent review to gather any potential evidence of insurance fraud and ensure the contract complies with Florida Law.
Avoid unintentionally being involved in insurance fraud.
Insurance fraud can be an intentional act, or you may unknowingly commit or be involved in fraud.
Intentional
- Filing an insurance claim for...
- Stolen property that was not taken
- Hurricane damage that was not caused by a storm
- Setting your home or property on fire
- Inflating the cost of a damaged item
- Allowing someone to use your insurance benefits for services
- Falsely claiming to be injured in a vehicle accident
Unintentional/​Unknowingly
- Your contractor files an insurance claim for damage that doesn't exist or for more damage than exists
- Your vehicle repair company charges your insurance for new parts when used parts were installed
- Your agent provides false information on your insurance application to obtain a better rate
- A repair person replaces your windshield and charges your insurance company when there is little or no damage
Contact Your ICA
Florida's Insurance Consumer Advocate
Office of the Insurance Consumer Advocate
200 East Gaines Street, Tallahassee, FL 32399
Phone: (850) 413-5923
Email: YourFLVoice@MyFloridaCFO.com
