NICB Issues Fraud Warning in Wake of Eastern Kentucky and Tennessee Valley Floods

Best Practices Offered to Deter Contractor Fraud

OAK BROOK, IL, FEBRUARY 22, 2025 – Unprecedented rainfall last week led to severe flooding in the Eastern Kentucky and Tennessee Valley region, which could result in tens of millions of dollars in damage. Because of this, the National Insurance Crime Bureau (NICB), the nation’s leading non-profit association dedicated to preventing insurance fraud and crime, is warning residents and business owners about potentially fraudulent contractors who prey on disaster areas.

NICB agents are currently coordinating with local, state and federal law enforcement agencies, as well as NICB member insurance companies, to aid in the recovery process and support residents in preventing fraud. As first responder efforts subside, NICB agents will deploy in the region to assist our partners in combating any fraud that arises as the rebuilding process begins.

“While most contractors run honest, ethical businesses essential to rebuilding communities after major catastrophes, there are often bad actors who take advantage of vulnerable homeowners after these events,” said David J. Glawe, president and CEO of the National Insurance Crime Bureau. “Following best practices when hiring a contractor and knowing the warning signs of potentially untrustworthy contractors are key steps to deterring this type of crime.”

Fraud schemes may come from companies or individuals promising debris and tree removal, home construction and medical services. NICB urges local residents to do their due diligence, check in with their insurance carrier and verify the credentials of anyone they plan to hire for a service.

Common red flags include high-pressure sales tactics via door-to-door solicitation, online or by phone.  Additionally, pushing residents to sign contracts on the spot – often with multiple blank spaces in them – demanding payment upfront, and even the requirement of signing an Assignment of Benefits agreement which transfers insurance rights to the contractor can be a signal to double check credentials and credulity. 

Best Practices for Deterring Contractor Fraud

1. Contact your insurance company immediately about damaged property.

• Ensure that you understand all documents related to your claim and consult your insurance carrier before making any decisions.

2. Obtain multiple bids and estimates; verify contractors.

• Obtain multiple estimates to compare prices and services.
• Request references and conduct background checks on the contractor.
• 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.
• Do your own research and inquiries through your state licensing agencies and the Better Business Bureau.

3. Scrutinize all offers and contracts.

• Avoid contractors who pressure you into 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 later with terms you did not agree to.
• Be cautious of signing an Assignment of Benefits agreement, which could transfer your insurance rights to a contractor.
• Never pay the full amount upfront or sign a completion certificate until you are satisfied that the work is finished.

4. Report suspicious activity immediately.

• If something seems off or you suspect fraud, report it to law enforcement and your insurance company immediately.
• Avoid sharing personal information over the phone, especially with callers claiming to represent a national company