10 Tips to Help Homeowners Avoid Fraud After Catastrophic Hurricanes

DES PLAINES, Ill., Aug. 22, 2023 /PRNewswire/ -- Every year, extreme weather events impact millions of homeowners and business owners nationwide. Over the past few years, hurricanes have increased in frequency and intensity. The damage caused by these catastrophic natural events unfortunately provides an opportunity for dishonest contractors to victimize and defraud homeowners who suffer disaster-related damages. This is why the National Insurance Crime Bureau (NICB) is partnering with local, state, and national law enforcement and government agencies to provide tips to help consumers avoid getting scammed after a hurricane or tropical storm by dishonest contractors and scammers. Last year, insured catastrophic losses totaled more than $99 billion with five to ten percent, or upwards of $10 billion, lost to contractor fraud.

"No one can control if their home is damaged by a hurricane, but what we can do is make sure that affected communities are not victimized twice by fraudulent contractors," said NICB President and CEO David Glawe. "As important as it is to prepare for these events before they occur, it is also vital to be prepared for what comes after. After a hurricane, like any natural disaster, consumers need to be aware of dishonest contractors who may use the events as an opportunity to take advantage of victims and their insurance providers."

These schemers often take advantage of homeowners through Assignment of Benefits (AOBs) contracts. After convincing homeowners to sign away their rights to any claims under the homeowner's insurance policy, bad-faith contractors are then able to inflate the claims to secure larger settlements for themselves – leaving the victim homeowner hung out to dry after devastating storms.  

Before working with a contractor or making any decisions on home-repairs, the NICB suggests the following tips to keep you and your family safe from this scheme:

• Call your insurance company for details on your policy.
• Get more than one estimate and get everything in writing. Cost, work to be done, time schedules, guarantees, payment schedules, and other expectations should be detailed and itemized. 
• Request references and do the research. 
• Ask to see the salesperson's driver's license and write down the license number and their vehicle's license plate number. 
• Look out for out-of-state contractor licenses, as well as vehicle registrations, as these may also indicate possible fraudulent contractors.  
• Never sign a contract with blanks; terms you don't agree with can be added later. 
• Never pay a contractor in full or sign a completion certificate until the work is finished.
• Make sure you review and understand all documents sent to your insurance carrier. Signing an Assignment of Benefits agreement transfers your insurance rights to the contractor. Know what that means for you.
• Never let a contractor pressure you into making a quick decision or hiring them or interpret the language of your insurance policy. 
• Never let a contractor discourage you from contacting your insurance company. Contact your insurance company first.

NICB also reminds consumers that the Federal Emergency Management Agency (FEMA) does not endorse individual contractors or loan agencies. Always request official identification from those who say they represent governmental agencies. For more specifics, call FEMA at (800) 621-FEMA.

Learn more about fraud prevention after a hurricane here. 

ABOUT THE NATIONAL INSURANCE CRIME BUREAU: Headquartered in Des Plaines, Ill., the National Insurance Crime Bureau (NICB) is the nation's leading not-for-profit organization exclusively dedicated to combatting and preventing insurance crime through Intelligence, Analytics, and Operations; Education and Crime Prevention; and Strategy, Policy, and Advocacy. NICB is supported by more than 1,200 property and casualty insurance companies and self-insured organizations. NICB member companies wrote over $582 billion in insurance premiums in 2021, or more than 82% of the nation's property-casualty insurance. That includes more than 96% of the nation's personal auto insurance. To learn more, visit www.nicb.org.

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SOURCE National Insurance Crime Bureau