Post-Disaster Contractor Fraud Costs Americans Billions Of Dollars Every Year

NICB’S Contractor Fraud Awareness Week runs May 22-26, 2023 

DES PLAINES, IL, MAY 22, 2023 — Post-disaster contractor fraud costs hardworking Americans billions of dollars every year. To address this growing problem, the National Insurance Crime Bureau (NICB) is focusing on educating homeowners on how to avoid becoming a victim of deceptive contractors after a natural disaster as part of its third annual Contractor Fraud Awareness Week.  Unfortunately, these catastrophic events provide an opening for dishonest contractors looking to take advantage of homeowners. In 2021, insurers paid $92 billion in catastrophe losses, with upwards of 10% or $9.2 billion lost to post-disaster fraud. This can add hundreds of dollars to a homeowner’s annual premium. NICB’s Contractor Fraud Awareness Week runs from May 22 to May 26, 2023, and includes partnerships with thirteen states that have issued official proclamations recognizing the importance of combating post-disaster contractor fraud.

“Catastrophic events impact millions of Americans every year,” said David J. Glawe, President and CEO of NICB. “From hurricanes to floods and everything in between, these events are often scary and life changing. But what makes these events even worse is what happens afterward as homeowners affected by these natural disasters are targeted by dishonest contractors. Often before the flood waters recede or rescue operations are complete, unscrupulous contractors prey upon individuals who are at their most vulnerable. Before hiring anyone, call your insurance company first. If you didn’t request it, then you should reject it.” 

NICB recommends reviewing the following tips before hiring a contractor for services: 

• Be wary of anyone knocking on your door offering unsolicited repairs to your home.   
• Be suspicious of contractors who try to rush you, especially on non-emergency or temporary repairs.   
• Be on the lookout for change order fraud, which can happen when a corrupt contractor submits fraudulent change orders to increase the work price or extend a contract without your permission.
• Do not believe a contractor who says they are supported by the government. The Federal Emergency Management Agency (FEMA) does not endorse individual contractors or loan companies. Call FEMA toll-free at 800.621.FEMA for more information.  
• Be selective in choosing a contractor. Consider recommendations from trustworthy sources, such as family, friends, and neighbors, or search online.  
• Get at least three written estimates for the work and compare bids. Check credentials with the Better Business Bureau or state attorney general’s office to see if the contractors have any outstanding complaints.  
• Always have a written, detailed contract that clearly states everything the contractor will do, including prices for labor and materials, clean-up procedures, and estimated start and finish dates.   
• Never sign a contract with blank spaces. A crooked contractor could alter after they receive your signature.  
• Never pay for work upfront. Always inspect the work and make sure you’re satisfied before you pay. Most contractors will require a reasonable down payment to start but do not pay anything until you have a written contract.  
• Avoid paying with cash; use a check or credit card instead. This creates a record of your payments to the contractor.  
• Download a copy of the NICB Post-Disaster Contractor Search Checklist, which walks victims through the contractor hiring process.   

Report Fraud 

Anyone with information concerning insurance fraud or vehicle theft can report it anonymously by calling toll-free 800.TEL.NICB (800.835.6422) or submitting a form on our website.