--- title: After a Storm, Letting a Contractor Cover Your Deductible Can Void Your Insurance description: The National Insurance Crime Bureau says a contractor offering to cover your deductible is asking you to take part in insurance fraud. author: Darie Nani (Editor-in-Chief) updated: 2026-07-31T23:32:20.815Z canonical: https://richdadmagazine.com/article/contractor-fraud-deductible-storm-insurance image: https://cdn.nanimediahouse.com/contractor-fraud-deductible-storm-79205.webp categories: Real Estate content_type: News region: United States publication: Rich Dad Magazine schema_type: Article --- A contractor turns up in a damaged neighborhood a few days after the storm, walks the roof, and makes an offer that sounds like a favor: the price can be written up so the insurance covers the deductible too, so there is nothing to pay out of pocket. The National Insurance Crime Bureau, the insurance industry's fraud investigation body, says a homeowner who agrees to that has just taken part in a crime. Its guidance is blunt. Manipulating the price to cover a deductible, or to cover work the disaster did not cause, is insurance fraud, and the bureau says insurance fraud is a felony. It adds that coverage may be rendered void where there has been misrepresentation by the insured. The offer arrives at the worst possible moment, which is the point. The bureau's own description of the pattern is that fraudsters prey on disaster victims when they are emotionally devastated and most susceptible, and that salespeople go door to door in damaged neighborhoods offering cleanup and repairs. Many of them are honest. The dishonest ones may take a payment or an insurance settlement and never finish the job, or use inferior materials and leave work that does not meet code. ## The bureau has issued three of these warnings since May The Texas notice is not a regional one-off. The bureau warned the whole country on 18 May, at the start of the sixth annual Contractor Fraud Awareness Week, then again on 18 June after tornadoes and severe storms in Illinois, and again on 31 July as Texas began recovering from flooding. Thirty-six states now formally back the awareness week, against twenty states and Puerto Rico two years ago. The volume of work available to these operators has grown with the weather. Citing disaster-cost figures from the nonprofit Climate Central, the bureau counted 23 major billion-dollar disasters in the United States in 2025, causing roughly $115 billion in damage. Reported instances of contractor fraud rose 38 percent between 2023 and 2025. Back in 2024 the bureau put the scale of the losses at upwards of 10 percent of catastrophe costs, or $9.3 billion of the $93 billion the country lost to 28 billion-dollar weather events in 2023. "Severe weather events often leave communities shaken and trying to rebuild their lives as quickly as possible," said David J. Glawe, president and chief executive of the bureau. "Unfortunately, criminals recognize those moments of vulnerability as opportunities for financial exploitation." > "Before anyone signs on for repairs, it is important to contact your insurance carrier, carefully review every document and verify that the contractor is properly established and qualified to perform the service." > — David J. Glawe, President and CEO, National Insurance Crime Bureau The people running these schemes have a name inside the industry, storm-chasers, and the bureau says their methods are becoming more sophisticated and more organized. Its own investigators now travel to the damage. Agents deploy to the scene immediately after a major catastrophic event to assess it and connect communities to resources, and last year they responded to most major catastrophic events in the country, working alongside local, state and federal law enforcement. ## Roof damage and water claims head the list of schemes The bureau names five schemes as the most common: manufactured roof damage, inflated water mitigation claims, abuse of assignment of benefits agreements, exploitation of elderly homeowners, and falsified documentation. The third of those turns on a document many homeowners sign without reading. An assignment of benefits agreement transfers the homeowner's insurance rights to the contractor. The bureau's advice on it is a single line, and it is about knowing what has been handed over rather than about refusing to sign: know what that means for you. Its wider warning is that a contractor should never be the one interpreting the policy, and should never be discouraging the homeowner from calling the insurer. A second tell is easier to check. An insurance carrier will not ask for a deductible up front or over the phone, so a caller claiming to be from a national carrier and asking for one is not from a national carrier. The bureau also says no contractor is endorsed by the government, because the Federal Emergency Management Agency does not endorse individual contractors or loan companies. ## The bureau's own remedy is a comparison sheet Rather than a list of warnings, the bureau's practical answer is a free fillable Contractor Search Checklist, laid out as three side-by-side columns so three bids sit on one page. Each column asks for the company, the representative, the phone number, the license number, the address, the website, whether a payment plan was offered and whether a completion time was given. A separate block records the homeowner's own insurer, agent, policy number, the type of disaster, the date it happened, the damage done and whether the insurer has been contacted yet. Four instructions sit at the top of it: get at least three written estimates and compare the bids, check credentials and Better Business Bureau reviews that cannot be removed, work with the insurer, and never sign an electronic document without reading it in full, requiring copies of every invoice sent to the insurer. The rest of what the bureau tells homeowners is procedural and cheap to do. Get more than one estimate and ask for references. Ask to see the salesperson's driver's license, and write down the license number and the vehicle's plate. Treat an out-of-state contractor license or vehicle registration as a reason to look harder. Get the cost, the work, the schedule, the guarantees and the payment terms in writing and itemized, never sign a contract with blank spaces in it, and never pay in full or sign a completion certificate before the work is done. Pay by check or card rather than cash, which leaves a record of what was paid. Credentials can be checked against the Better Business Bureau or the state attorney general's office for outstanding complaints. Sean Kevelighan, chief executive of the Insurance Information Institute, which runs the consumer campaign alongside the bureau, AARP and the Coalition Against Insurance Fraud, put the same point from the other side. "Contractors play a key role in turning disaster damage into recovery for families, businesses, and communities," he said. "Working with qualified professionals and maintaining open communication with insurers can help homeowners and businesses recover more efficiently." More on disaster fraud is at [nicb.org](https://www.nicb.org/prevent-fraud-theft/disaster-fraud). ## FAQ **Q: What are some examples of contractor fraud?** The National Insurance Crime Bureau names five as the most common: manufactured roof damage, inflated water mitigation claims, abuse of assignment of benefits agreements, exploitation of elderly homeowners, and falsified documentation. It also warns about contractors who demand large upfront payments, do unnecessary or incomplete work, or encourage a policyholder to exaggerate the damage. **Q: What does assignment of benefits mean in insurance?** Signing an assignment of benefits agreement transfers your insurance rights to the contractor. The bureau lists abuse of these agreements among the five most common contractor-fraud schemes, and its advice to homeowners is to understand what signing one means before doing it. **Q: What is an example of disaster fraud?** A contractor offering to write the price up so that the insurance covers your deductible as well. The bureau says manipulating the price that way, or billing for work the disaster did not cause, is insurance fraud, that insurance fraud is a felony, and that coverage may be rendered void where the insured has misrepresented something.