MALVERN, PA — Insurance industry groups are warning homeowners to exercise caution when hiring contractors after storms and natural disasters, citing a sharp increase in fraud schemes that can inflate insurance claims and leave property owners facing financial losses and unfinished repairs.
The Insurance Information Institute and the National Insurance Crime Bureau said reported cases of contractor fraud have increased 38% over the past three years as severe weather events expose more homeowners to property damage and recovery costs.
According to the organizations, contractor fraud often involves coordinated activity among contractors, public adjusters, and attorneys who allegedly work together to inflate insurance claims and exploit homeowners seeking quick repairs following disasters.
“Contractor fraud remains one of the most common schemes reported after major storms and catastrophes,” said David J. Glawe, president and chief executive officer of the National Insurance Crime Bureau. “These bad actors prey on families when they are most vulnerable, often leaving behind incomplete work, poor workmanship and financial hardship.”
The groups said fraudulent operators frequently target storm-damaged neighborhoods through door-to-door solicitations, flyers, phone calls, and online advertisements. Homeowners may be pressured to sign contracts immediately or pay substantial deposits before work begins.
“After a disaster, homeowners are often under tremendous pressure to make repairs quickly, which can make them vulnerable to dishonest contractors,” said Sean Kevelighan, chief executive officer of the Insurance Information Institute. “Taking time to verify credentials, compare estimates and carefully review contracts can help homeowners avoid costly scams during the recovery process.”
The organizations urged homeowners to verify that contractors are licensed, bonded, and insured before agreeing to work. Consumers are also encouraged to obtain multiple written estimates, check references, confirm insurance coverage, and ensure project details are fully documented in writing.
Industry officials advised against signing incomplete contracts, paying large upfront deposits, or making full payment before work has been completed and inspected.
The warning comes as the National Insurance Crime Bureau expands public awareness efforts around contractor fraud. The organization plans to conduct training programs for insurance carriers and law enforcement focused on property-related fraud schemes, including hail damage, water mitigation, and mold claims.
The bureau also said it will advocate for official recognition of Contractor Fraud Awareness Week in additional states. Over the past five years, 35 states and Puerto Rico have formally recognized the initiative.
As part of its outreach campaign, NICB plans a national media tour covering more than 20 television markets, public service announcements reaching more than 100 markets, and ongoing social media education efforts focused on fraud prevention.
Consumers who suspect contractor or insurance fraud are encouraged to contact their insurer, local law enforcement agency, or the National Insurance Crime Bureau at 800-TEL-NICB (800-835-6422) or by texting TIP411 with the keyword “FRAUD.”
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