Post Irma Property Insurance Scams

In what has already been the most active hurricane season in years, Hurricane Irma has left behind a wide swath of destruction throughout the state of Florida. Whether devastation in the Keys, to flooding in the Miami area and Fort Lauderdale, and wind damage up and down the peninsula, many Floridians are not only struggling with the insurance claims process, but also facing the potential of an array of insurance scams.

Common Property Insurance Scams

Although insurance-related scams can arise will all types of insurance products, homeowners are frequently targeted in the aftermath of hurricanes because urgent, expensive repairs are usually needed. Some of the most common insurance scams in the wake of major storms include:

  • Paying for repairs upfront
  • Misusing an Assignment of Benefits contract
  • Fraudulent victim relief funds
  • Robocalls demanding storm victims to make payments

How to Avoid Insurance Scams

As homeowners work with contractors to arrange for repairs, it is important to remember that most contractors will ask for some of the payment upfront. Nonetheless, individuals should be wary of contractors that ask for payment in full to start working. When negotiating repair costs with contractors, the rule of thumb is to make a reasonable deposit, between 10 to 15 percent, and pay the balance only when the work is completed.

Additionally, getting a written estimate of the work, including materials, clean-up, and disposal costs, as well as start and end dates, and the total price, can help to protect homeowners from insurance scams. Moreover, any payments should be made with a credit card if possible, rather than cash, so that charges can be disputed if the contractor fails to live up to the repair agreement.

One key factor associated with insurance scams is a common practice known as “assignment of benefits” which involves homeowners signing over insurance benefits to contractors who have been hired to perform repairs. Although this practice is legal, and can help to ensure claims are properly paid, scrupulous contractors often pad claims, particularly for roof and water damage. Homeowners who enter into assignment of benefits agreements with contractors should always verify that the submitted claims are accurate.

Another common scam after a significant storm is a robocall claiming to be the insurance company, notifying the homeowner that a premium is late and that home and/or flood insurance policies will be cancelled unless a payment is made. When in doubt, contact the insurance company directly to determine if the premium payments are up-to-date.

Finally, as we have seen, victim relief funds often surface after a storm asking for donations. While many organizations, such as the Red Cross, are legitimate, bogus victim relief funds often target people through email, text, social media and crowdfunding sites.

What is being done about insurance fraud in Florida?

Regardless of the form it takes, insurance fraud is considered a felony in Florida, and civil charges may also be brought. A criminal conviction can lead to imprisonment and significant fines while a civil case may result in fines, penalties and an order to pay restitution. In short, if you have been accused of insurance fraud, you are well advised to consult with an experienced insurance fraud defense attorney.