Auditor warns of frauds in hail-damage repair

Montana State Auditor Matt Rosendale and other members of the Auditor’s Office spoke to community members and insurance agents from the region about hail fraud prevention and answered several other questions regarding insurance in a stop in Havre Thursday.

“What we are trying to do is get the insurance industry, the contracting industry, the adjusting industry, all these folks together to hear what is going on and make sure that you are sharing information with the consumers,” Rosendale said. “Because, at the end of the day, the consumers are the ones that are dramatically impacted … and they are the ones that are controlling all the contractual agreements.”

Insurance is an important factor throughout life, he said, with ties to everybody, whether home owner, car or life insurance. It is importantthat insurance agents as well as community members understand insurance is a contractual promise between the customers and companies so the customers will be covered when in need, Rosendale said.

He said that he and other members of the Auditor’s Office are going around the northern section of the state because of the high number of hail storms and hail damage experienced in the region over the past several decades, such as the July 4, 2015 hail and windstorm, which caused millions of dollars of damage to the area.

He added that “bad actors” or contractors, adjustors or insurance providers who take advantage of people do not follow the laws and, through the workshop, his office is trying to make sure the “good actors” are able to educate the consumer and the process can move smooth.

The 2015 hail storm

Deputy Insurance Commissioner Bob Biskupiak said his guiding principle is how to take care of the customers. He asked people who were at the workshop first what went right and what went wrong about a major hailstorm July 4, 2015.

Richman Insurance Owner Don Richman of Harlem said that during the hail storm Farmers Alliance Mutual Insurance Co. stepped up to the plate with local adjusters sent in immediately to assess claims and were able to work together to provide customers with coverage for their claims.

Koefod Insurance Agency Operations Manager and agent Kim Wirtzberger said that 90 percent of their insurance customers were hit during the storm.

“Everybody was out for Fourth of July that night in their vehicles. It took our agency to our knees,” she said. “But it showed really great teamwork by our people, and we just knocked away at it the best we could. Our companies did the best they could, but there was so much that they couldn’t get to everybody fast enough.”

She added that people were in a panic and were worried about getting repairs as soon as possible.

Duchscher Kapperud Insurance LLC co-owner Melissa Kapperud said that the storm showed a lot of faithfulness in their employees. But with such a large number of homes damaged, it was important to be up front with their customers about it taking time to get assistance.

State Farm Insurance agent Anthony Cammon said his company immediately got “boots on the ground,” and began getting adjusters in the area. He said that they had set up a tent at Havre Middle School for vehicles He added that the adjusters spent at least two times longer than expected to get to all of their customers.

Problems after the storm

One of the main concerns that was brought up during the meeting was the large number of out-of-state contractors or “storm chasers” who came to the area and did either low-quality work or were scamming customers and further damaging the customers’ homes.

Several members of the group also said the “bad actors” were also falsely informing their customers on contracting bids, even encouraging them to unknowingly commit insurance fraud.

Fraud Investigator Cheri Meier of the Auditor’s Office said that the definition of insurance fraud is an oral or written statement containing false, incomplete or misleading information for payment or other benefits, such as a contractor inflating claims to hide deductibles, in support of claims. She added that insurance fraud is now within administrative and criminal codes, and for an action to fall under the criminal code the department has to have proof of intent.

Biskupiak said that it is a known issue of having “bad actor” contractors, with many of these companies coming from out of state and registering with the state Department of Labor. He added that insurance companies cannot provide input to their customers, regardless if their customers are working with a disreputable company because of the concern of steering customers to a certain business.

Rosendale said that even though insurance providers are not able tell their customers who to hire as the contractors for their homes, they can provide the information on how to identify a disreputable company.

“It is incumbent upon you to share to share information with your customers that when there is damage and they have contracted with someone that they make sure that it is a reputable person that is going to guarantee their work.

Biskupiak said it is important for insurance agents to inform customers about their insurance and how to file claims. It is important customers know what policies they are purchasing and what is covered within their policies. He added that it is still a buyer-beware market and it is up to insurance providers to educated customers to help them.

“We’ve got to be very careful of what we are communicating with our customers,” he said.

Local property manager Dave Kaasa said that at on the customer side, insurance providers can often seem forceful or even aggressive when selling policies to them. He added that it is important for providers to explain why a policy is either good or bad rather than telling them one way or the other.

Montana Office of Consumer Protection says that some of the ways customers can vet their contractors is by researching their project, by getting names of several contractors from people who have worked with the contractor previously, to check the references, get written bids on their projects, to compare bids, to make sure the contractor is registered with the Montana Department of Labor and Industry, check to see if the contractor has liability or workers’ compensation insurance, see if the contractor is bonded, to get a written contract and to communicate with the contractor and inspect the project.

Meier said that, as a customer, people need to read the contract thoroughly and not just sign on the dotted line. She added that home owners should stay away from signing any document which would provide the power of attorney to the contractor or having the contractor work directly with the insurance company.

Giving the contractor power of attorney could allow the contractor to take the home owners insurance checks from them and lead to the contractor having the power to place a lien on the home or cutting corners with construction costs, she added.

“I would say definitely read everything and understand that you are the home owner,” she said. “It’s your property, it’s your responsibility.”

Rosendale said that is insurance providers or customers have any questions or concerns they can contact the Auditor’s Office at 406-444-2040 or visit https://csimt.gov/.