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

Best Practices Offered to Deter Contractor Fraud

OAK BROOK, Ill., Feb. 22, 2025 /PRNewswire/ -- 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.

2.      Obtain multiple bids and estimates; verify contractors.

3.      Scrutinize all offers and contracts.

4.      Report suspicious activity immediately.

Additional resources and information can be found by visiting NICB.org or calling NICB's hotline at 1-800-TEL-NICB.

About the National Insurance Crime Bureau: Headquartered in Oak Brook, Ill., the National Insurance Crime Bureau (NICB) is the nation's leading not-for-profit organization exclusively dedicated to combatting and preventing insurance crime through Intelligence, Analytics, and Operations; Education and Crime Prevention; and Strategy, Policy, and Advocacy. NICB is supported by more than 1,200 property and casualty insurance companies and self-insured organizations. To learn more, visit NICB.org.

SOURCE National Insurance Crime Bureau