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How to Avoid Fraud After a Natural Disaster

Posted on Oct 9, 2017

Following a severe weather event or natural disaster, victims are focused on rebuilding their lives, homes and trying to get back to “normal.” For many, this could take weeks, months or even years. Unfortunately, there are other ways victims (in the storm area or out) can be affected after a natural disaster, too. Individuals – fraudsters – will turn up and try to take advantage of others during their time of need and time of rebuilding.

Here is a list of seven types of fraud or fraudulent schemes to look out for after a severe weather event from the Property Casualty 360 website:

1. Fraudulent charitable organizations: People are very charitable in the aftermath of a natural disaster. Do diligent research on a cause before donating to make sure it’s legitimate. Verify the request/charity/organization/donation recipient is legitimate.
2. Policyholder fraud: Some insureds try to take advantage of their insurance companies and file claims for losses they didn’t actually have, like expensive jewelry or other material goods.
3. Storm chasers: Certain contractors chase storms in order to prey on homeowners. Before working with any contractor, check with the Better Business Bureau and get references. Also, never pay for work in full up front.
4. False policy cancellations: Homeowners and renters should be aware of robocalls informing policyholders that their premiums are past due. Always call your insurance agent to assess the validity of these claims.
5. Business claim fraud: Businesses may also try to take advantage by submitting false claims for workers’ compensation, exaggerated lost wages or revenues and inflated inventories, among other claims. Adjusters will require extensive documentation to get a good picture of business operations and losses sustained.
6. Public adjusters that prey on victims: Staff and independent adjusters working for insurance companies will not charge people for their services. Most public adjusters are good, but some can charge up to 15 percent of the insurance settlement for their services and will try to take advantage of victims. They may also recommend contractors who will give them kickbacks for recommending their services.
7. “Used” car sales: Some crooks will purchase flooded cars, clean them up and sell them as used cars, without explaining their history. Check a car’s vehicle inspection number (VIN) or CARFAX report before purchasing after severe weather.