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12 Key Tips for Hiring Contractors and Builders

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Every year, thousands of American families face major home damage from tornadoes, hurricanes, fires and other disasters. If you're one of them, homeowners insurance can give you the second chance you need to rebuild.

But getting the work done isn't as easy as just writing a check. Choosing a reliable, professional contractor or homebuilder is the first step to a successful recovery.

Here are 12 tips to help you avoid costly mistakes when choosing and working with contractors and builders.

1. Beware of disaster chasers.

In the wake of a natural disaster, it's common for contractors to roll into the area, looking to capitalize on widespread home damage. While many of these companies are reputable, others are fly-by-night operations lacking the qualifications to do the job right. The Better Business Bureau warns against door-to-door contractors who use high-pressure sales tactics or offer you unbelievable deals.

2. Seek referrals.

Talk to friends who have used building contractors in your area. Ask your county's building inspector for recommendations. You can also check for reputable local contractors with the National Association of the Remodeling Industry, National Association of Home Builders or Better Business Bureau.

3. Check credentials.

Call your local Better Business Bureau to find out how long a company has been in business. Google the name of the company's owner; sometimes, unscrupulous contractors will go out of business and then start back up under a new company name. If your state requires contractors to be licensed, registered or bonded, contact the appropriate regulatory agency to make sure the person you choose meets the requirements.

4. Visit current job sites of a builder or contractor.

Are they clean? How do workers handle tools and materials? Are dust covers used to protect belongings? Remember, they'll work the same way on your turf. While you're at it, visit the contractor's permanent office to make sure it's equally professional.

5. Ask contractors to provide their insurance information.

Companies should carry workers' compensation, property damage and personal liability insurance. Ask for the documents, and look for expiration dates when they come to do your bid -- you don't want coverage to expire before your project is done.

6. Don't forget the subcontractors.

General contractors may hire other specialized companies, called subcontractors, to work for them. If so, make sure they, too, have all the necessary licenses and insurance. And have your contractor specify in the work contract whom they will hire as subcontractors.

7. Get estimates in writing.

Get bids from at least three reputable contractors. If prices differ wildly, find out why and don't automatically choose the lowest price. Sometimes you get what you pay for: Radically cheaper bids might mean the contractor will use cheaper materials, hire fewer workers and put a lower priority on repairing your home.

8. Understand the timing.

Ask how soon the work can begin. Especially after a major disaster, some contractors might be booked solid and unable to start on your project until months later. On the bright side, this could be a sign of a quality contractor who is in high demand. If a contractor can start tomorrow, there might be a reason that the business has no other customers.

9. Seal deals in writing, too.

Make sure the start and completion dates, project scope, materials, costs, payment schedule and all promises are specified in the contract.

10. Read and understand the work contract.

Don't assume anything. If you're unsure about the jargon, or any of the wording, let an attorney review the contract for you.

11. Don't pay too much upfront.

Typically, contractors will ask for 20%-30% before work begins. If they ask for much more, walk away. And whatever you do, don't pay the final installment until all work is completed to your satisfaction.

12. Never pay in cash.

Use a credit card or check, and keep receipts. That way, you have proof of payment all along the way.

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USAA, a diversified financial services organization, is the leading provider of competitively priced financial planning, insurance, investments, and banking products to members of the U.S. military and their eligible families. Rated among the highest among financial services companies for customer advocacy in a Forrester Research survey, USAA provides convenient and accessible financial products to its more than 9 million members. For more information about USAA, or to learn more about membership, visit usaa.com

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