This article was contributed by Natalie Addy, a fraud and forensic accountant at Adam Shay CPA, PLLC.
The latest storm has come and gone, and home and business owners are left dealing with the aftermath. Sorting through the damage and trying to understand your insurance coverage can be overwhelming. Some people are surprised to find that they do not have flood insurance — this is coverage that you have to purchase in addition to your hazard and/or wind and hail coverage. Business owners often don’t know if they have business interruption insurance.
Business interruption insurance provides income to business owners to cover lost revenue when a business is shut down due to specific events. Depending upon your policy, there are often several ways to calculate such a loss and the way the insurance company calculates it may not be optimal for the policy holder.
If you had physical property damage then you’re left trying to figure out what to do next to make sure your property gets repaired. Protect yourself from repair fraud by following these guidelines:
- Do not sign anything before talking to your insurance company. If you sign documents this may allow the contractor to claim your insurance money and skip out on the repairs, leaving you to cover the repairs out of pocket. The document is called Assignment of Benefits (AOB). It allows the policy holder to sign over the administration of the claim to the contractor.
- Get competitive bids. It is tempting to hire the first contractor who gives you a quote because you want your home repaired immediately but you need to get multiple quotes. Requesting multiple quotes results in fair prices and avoids price gouging. Also when working with a contractor make sure to read all documents and check with your insurance agency to make sure the repairs will be covered.
Here are some additional tips to help you avoid post-storm related fraud:
- If you have damage reach out to your insurance company first.
- Use caution when using door to door contractors.
- Make sure you know your coverage and coverage limits — call your insurance company before signing any contracts or paying for work.
- Do not pay in full for repairs. Contractors should not request more than half the cost upfront.
- Get everything in writing; detailed list of what’s being completed, cost and time frame.
- Make sure there are no blanks in the contract.
- Make sure the contractor is licensed and insured.
- Be aware of an adjuster who will waive your deductible
- Always ask for a business card and identification.
- If it sounds too good to be true, it probably is.
Our goal today was to educate you on some things to consider post a storm event. If you need assistance in understanding a potential business interruption claim or feel that you may have been a victim of fraud, feel free to reach out to our Fraud and Forensic Accounting team.
Caroline Montgomery, CPA (NC License Number 39017), MSA, is tax manager and partner of Adam Shay CPA, PLLC. The most rewarding part of what she does is helping business owners and individuals achieve their goals, all while working with a dynamic team that is growing quickly. The firm focuses on a proactive approach by encouraging clients to minimize taxes via income tax planning and projections, or by focusing on other areas of their business as part of the firm's Virtual CFO services. The firm also offers tax preparation, fraud and forensic accounting and tax issue resolution services. She moved to Wilmington in 2014 and started at the firm in 2015. Caroline graduated with her her undergraduate and graduate degree in 2010 from East Carolina University. She is actively involved with NourishNC as their Treasurer and enjoys volunteering with various organizations throughout New Hanover County. In her free time, Caroline enjoys spending time with her husband, Mike, and dog, Mason, as well as travelling and going to the beach.