Natural Disaster Fraud: 10 Signs of Contractor Fraud

In May 2025, communities across Kentucky, Missouri, and Texas were rocked by a wave of destructive tornadoes that left thousands in urgent need of repairs and recovery. But while most headlines focus on the physical destruction, claims professionals know there’s another wave to watch for: contractor fraud.

Unfortunately, fraud has become synonymous with natural disasters, with fraudsters on the move just as quickly as emergency responders. Fake contractors, inflated invoices, and shady agreements can disrupt legitimate recovery efforts and drain self-insureds, risk managers, and insurers of critical resources. If you handle claims in storm-prone regions, or anywhere that can be affected by natural disasters from hail to fire, now’s the time to tighten your defenses.

In this blog, we’ll walk through key signs to watch for post-disaster, red flags for contractor scams, and how you can quickly prevent these schemes before they escalate.

Natural Disasters on the Rise?

Severe weather is on the rise. According to the National Oceanic and Atmospheric Administration (NOAA), the U.S. has already seen more than a dozen billion-dollar weather disasters in the first five months of 2025 alone. Tornadoes, hurricanes, floods these events create urgency, confusion, and chaos, making it the perfect opportunity for bad actors to swoop in.

The Federal Trade Commission (FTC) and FEMA have issued repeated warnings about “storm chasers”—not the fun kind. Storm chasers is a new nickname for contractors who descend on hard-hit areas offering repairs, then vanish with stolen deposits or inflated repair costs. In 2024, disaster-related fraud complaints jumped by over 25% compared to the previous year.

Forecasters expect a busier-than-normal 2025 Atlantic hurricane season due to warmer ocean waters, though not as intense as the chaotic 2024 season. According to the (NOAA), there’s a 60% chance this season will be above average, driven mainly by warm sea temperatures, a key ingredient for powerful storms.

Forecasters expect there will be a 60% chance the 2025 Atlantic hurricane season will be above average driven mainly by warm sea temperatures.

Here are the NOAA predictions for this year:

• 13 to 19 named storms
• 6 to 10 hurricanes
• 3 to 5 major hurricanes (Category 3 or higher)

For reference, the average season typically sees 14 named storms, 7 hurricanes, and 3 major hurricanes. In other words, this is going to be a busy insurance season specifically for those in claims management.

Natural Disaster Fraud: 10 Signs of Contractor Fraud

While the urgency to rebuild after a storm or fire is real, so is the risk of inflated claims, unauthorized repairs, and financial exploitation. Whether you’re on the ground or managing claims remotely, recognizing early warning signs can mean a real difference

1. Vague or Padded Scopes of Work
   Look closely at line items for broad terms like “miscellaneous labor” or inflated costs for common materials. Do the repairs listed match the documented damage?
2. Invoices That Don’t Match Site Conditions
   If you’re remote, request timestamped photos or live walk-throughs to validate that repairs were actually made. Cross-reference photos with invoice dates. Bonus points if you can have someone there in person.
3. Questionable Contractor Relationships
   Watch for contractors who insert themselves into the claims process without proper authorization. If a contractor is negotiating directly with your claimant or attempting to bypass standard channels, verify their role and stop any unauthorized involvement immediately.
4. Assignment of Benefits (AOB) Abuse
   AOBs can hand over full control of the claim to the contractor, this can sometimes result in inflated values or unauthorized repairs.
5. Repeat Contractor Referrals
   If multiple claims are tied to the same contractor—especially with unusually high estimates—it may indicate a fraud ring operating in the region.
6. No Proof of Licensing or Insurance
   Use tools like the NICB or state databases to verify contractor licenses, past complaints, and fraud flags.
7. Lack of Professionalism
   Beware of unbranded trucks, no business cards, and contractors who avoid formal contracts. Legitimate businesses document everything.
8. Pushy or High-Pressure Tactics
   Scammers often push for quick signatures or full upfront payment. Urgency is almost always a red flag—especially in emotionally charged post-disaster environments.
9. Door Solicitations
   Ask claimants how they found their contractor. Many fraudsters canvass neighborhoods immediately after a storm.
10. Delayed SIU Referrals
    Don’t wait for d flags to pile up. Escalate to your Special Investigations Unit (SIU) early to assess potential fraud exposure and avoid compounding losses.

Storms may be unpredictable, but contractor fraud isn’t. With weather-related claims on the rise, it’s important to have a good, basic (and ideally in-depth) understanding of the fraud tactics that take place post-natural disasters. By educating yourself and your team, verifying credentials, and acting swiftly on red flags, you can help protect your claimants and your bottom line.

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Check out our sources:
• National Oceanic and Atmospheric Administration (NOAA), 2025 Billion-Dollar Disaster Report
• NICB Contractor Fraud Prevention Guidelines