CAIF: Insurance Swindles Coming, Hiking Cost of Hurricane Rebuilding

Costly insurance swindles soon will spread in the Gulf region as victims begin rebuilding from hurricanes Katrina and Rita, the Coalition Against Insurance Fraud warned (www.InsuranceFraud.org).

Insurance companies are beginning to process claims. Most victims will be honest. But the vast destruction will invite dishonest claims, possibly adding millions of dollars to the cost of rebuilding the ravaged Gulf Coast region.

Insurers will reportedly have a harder time verifying claims for people whose homes and possessions were completely swept away. Dishonest claimants also believe insurers will be too busy to investigate suspicious claims closely enough amid the chaos.

Shady contractors and public insurance adjusters also will try to fleece desperate hurricane victims and insurers. But insurers caution they’re watching for swindles.

Lost or damaged property — Homeowners or renters will claim they lost jewelry, stereos, TVs or other goods they never owned. Business owners will claim they lost phantom inventory or equipment. They may also inflate claims for lost business.

Disappearing vehicles — People might falsely claim they lost cars, minivans or SUVs in the flooding – though their vehicles weren’t near the Gulf.

Home arsons — Many Gulf residents lack flood insurance. Their homeowner policies generally don’t cover floods, but do cover fires. So some people will torch their homes and make illicit fire claims.

Phantom claimants — Some swindlers will impersonate real claimants to steal their insurance checks.

Crooked public adjusters — Some adjusters may charge homeowners a large fee, then disappear without handling the claim. They also may show owners how to file bogus claims, for a cut of the insurance money. Some adjusters may also refer victims to crooked contractors who bribe the adjuster for referrals. Regulation of public adjusters is weak in this region.

Shady contractors — Unlicensed or inexperienced contractors may perform shoddy work, but charge a victim’s insurer large bills. Some contractors also will charge much of the money upfront, but disappear without completing the work.

Fake deaths — Residents may claim they lost a loved one whose body was never found. Outsiders may claim a spouse “disappeared” while visiting the Gulf region. In either case, they’ll make bogus life-insurance claims for people who are alive. A claim can run several hundred thousand dollars.

Consumer advice (contractors)

* Use reputable local contractors, if possible
* Get a signed contract before work begins
* Don’t pay in full before work begins
* Never pay in cash
* Have an adjuster from your insurer inspect the damage before work begins

Consumer advice (public adjusters)

* Make sure the adjuster is licensed
* Ask for references
* Don’t let adjusters convince you to inflate insurance claims
* Call your state insurance department if you suspect a scam.