Avoiding Fraud after Disaster
Fraudulent activity tends to spike following natural disasters, and scammers often take advantage of these unfortunate situations by targeting impacted homeowners. The steps you take after a disaster, like filing insurance claims and finding a contractor to rebuild your home, can be overwhelming, but these tips can help you navigate the process and avoid fraud.
If a natural disaster has caused damage to your home, call your insurance company first, before scammers can interfere with the process. If you get a phone call from someone claiming to work for your insurance company, make sure you don’t give out any personal information or your policy number until you verify the call is legitimate.
Tips for filing post-disaster insurance claims:
- File your claim quickly.
- Take lots of pictures and video of damage. It’s helpful to have photos of your home before the disaster, too.
- Try to prep a list of the valuable items in your home before disaster strikes so you can easily recall lost or damaged items.
- Get a copy of the adjustor’s report.
- Make temporary repairs to protect property from further damage and keep receipts of the items you purchased to repair/protect property (tarps, plywood, etc.).
- Read your insurance policy to understand what it includes and excludes.
- Your insurance claim check may be made payable to you and your mortgage lender/servicer.
When you’re ready to rebuild, make sure your contractor:
- Has an acceptable amount of experience.
- Has a permanent business address.
- Is licensed (where applicable), bonded, and insured (workers’ compensation and liability insurance). Be sure to ask for copies of documents and policies.
- Has active licenses (where applicable) verified by your state or local jurisdiction’s licensing authority.
- Is in good standing with your state’s Better Business Bureau.
Once you find qualified contractors:
- Don’t feel pressured or rushed to sign a contract with the first contractor you find.
- Get at least three written bids that are detailed enough for you to understand the work that’ll be done.
- Find at least three positive reviews from other customers.
- Ask about their experiences with similar projects or rebuilding after a disaster.
- Require a written contract.
- Make sure the contractor applies for all necessary permits.
- Request a copy of the purchase order. (The initial, up-front payment should only include the cost of materials.)
- Make sure your contractor’s estimate (and potential markup) is reasonable by contacting suppliers or looking up the cost of materials online.
- Ensure that completion dates seem realistic and reasonable.
- Never pay cash. (Use credit cards or checks to provide records of payments.)
Remember: If you receive an offer or information that sounds too good to be true, it probably is.
To report any suspicion of fraud, fill out our Mortgage Fraud Report form.
For additional information on how to avoid scams following a natural disaster, visit the Federal Communications Commission (FCC) website.