As residents in the Southeast recover from the devastation of Hurricane Helene and face the wrath of Hurricane Milton, the National Insurance Crime Bureau (NICB) is urging homeowners and business owners to be vigilant against potential contractor fraud schemes.
“Unscrupulous contractors may try to take advantage of vulnerable victims in the aftermath of a disaster,” said David J. Glawe, NICB president and CEO. “We are urging residents to take extra caution to avoid these scams. Be wary of door-to-door contractors who demand upfront payments, try to pressure you into signing quickly written contracts, or discourage you from talking to your insurance company first.”
To help residents protect themselves from fraudulent contractors, the NICB suggests the first thing anyone should do before signing any contracts or making decisions, is to contact their insurance company to discuss the claim and understand their coverage.
The agency says to review all documents carefully, including contracts, estimates, and payment schedules – again before signing anything. Particular attention should be paid to Assignment of Benefits (AOB) agreements, which can transfer a person’s insurance rights to a contractor -- a piece of paper that one ConsumerAffairs reviewer said they were presented "under the pretext that you have to sign something in order to be able to give you an estimate."
Verify, verify
You can’t stop there, however. The NICB urges all consumers in this situation to verify every contractors by obtaining multiple estimates, requesting references, and conducting background checks. Be cautious of contractors who pressure you into making immediate decisions or signing contracts on the spot. Get all agreements in writing, including costs, work to be done, timelines, and payment schedules.
“Do not sign contracts with blank spaces,” the NICB urges. “These can be filled in with terms you did not agree to later [and] never pay the full amount upfront or sign a completion certificate until you are satisfied that the work is finished.”
When speaking with a caller claiming to be a national carrier, you should be extremely cautious about sharing personal information with them, too. Keep in mind that insurance companies will never ask you to pay your deductible up front or over the phone.
Print this list out if you're dealing with a contractor
To help anyone who is dealing with a contractor after a storm, the NICB offers these tips to avoid being defrauded. You might want to print this out if you're in that situation.
Contact your insurance company immediately.
- If your property has been damaged, contact your insurance company first before signing any agreements with a contractor or making any decisions.
- Ensure you understand all documents related to your claim.
- Be cautious of signing an Assignment of Benefits (AOB) agreement, which could transfer your insurance rights to a contractor.
- Report suspicious activity. If something seems off or you suspect fraud, report it to your insurance company immediately.
Verify all contractors.
- After a disaster, residents may encounter contractors offering immediate cleanup and repair services. While many are reputable, some may be fraudulent. Obtain multiple estimates to compare prices and services.
- Request references and conduct background checks on contractors.
- Verify the contractor’s identity by asking for their driver’s license and recording their license number and vehicle plate.
- Be cautious of out-of-state licenses and vehicle registrations, which may indicate potential fraud.
Scrutinize offers and contracts.
- Avoid contractors who pressure you into making immediate decisions or signing contracts on the spot.
- Get all agreements in writing, including costs, work to be done, timelines, and payment schedules.
- Do not sign contracts with blank spaces; these can be filled in with terms you did not agree to later.
- Never pay the full amount upfront or sign a completion certificate until you are satisfied that the work is finished.
Trust your instincts.
- Avoid sharing personal information over the phone, especially with callers claiming to represent a national carrier.
- Provide information only after verifying their identity.
- Insurance companies will never ask you to pay your deductible up front or over the phone.
ConsumerAffairs also has an extensive list of contractor-related reviews available here.
Anyone with information concerning insurance fraud can report it anonymously by calling toll-free 800.TEL.NICB (800.835.6422) or submitting a form on its website.