New Wisconsin Law Aims to Protect Against Contractor Fraud

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, and 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, so-called 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