Severe weather forces churches and nonprofits to make fast decisions about repairs while continuing to serve their communities and maintain operations. That urgency often requires hiring contractors quickly — creating openings for contractor fraud that can inflate repair costs, delay recovery, and complicate the insurance claims process. These inflated repairs inure to the benefit of unethical contractors while harming Churches in the form of delays and risks of uninsured costs and increased premiums.
What the data says about contractor fraud
A 2026 report from the National Insurance Crime Bureau (NICB) highlights that contractor fraud increased 38% between 2023 and 2025. Common schemes include:
- Manufactured roof damage
- Inflated mitigation or repair claims
- Misleading contracts that unintentionally transfer insurance rights away from property owners
These issues can delay claims, increase out-of-pocket costs, and in some cases create legal or coverage complications that extend well beyond the repair itself.
An example from the field
In a recent case, a contractor was found liable after allegedly providing inflated repair estimates that were used during the appraisal process, contributing to a prolonged dispute over the scope and cost of repairs. The case ultimately resulted in a jury verdict potentially exceeding $2 million and serves as a reminder that churches and nonprofits should carefully vet contractors and maintain visibility into the claims and repair process. (See related story in Business Insurance).
The good news is that most contractors are reputable professionals committed to helping organizations recover. Understanding how fraud occurs — and knowing what warning signs to watch for — can help you and your team make informed decisions and protect your organization throughout the repair process.
How contractor fraud occurs within insurance claims
After major storms, contractors often begin canvassing affected neighborhoods and communities, offering inspections and repair services. Many are legitimate professionals who provide an important service in helping organizations rebuild.
However, following widespread storm events, the volume of solicitations increases significantly—and so does the risk that you may encounter misleading practices or agreements that are not in your best interest.
In many cases, fraud doesn’t begin with obvious deception. It can start with confusing paperwork, aggressive sales tactics, promises that sound too good to be true, or misunderstandings about how the insurance process works.
You may feel pressure to sign documents immediately, authorize emergency work without fully understanding the scope, or rely on a contractor's interpretation of insurance coverage rather than communicating directly with your insurer. These situations can create complications that extend far beyond the initial repair project — including delays, disputes, and increased financial exposure.
Common red flags of contractor fraud
While not all of the following practices indicate fraud, they are important warning signs that merit closer review before signing agreements or authorizing work.
Red flag #1: Unsolicited inspections or “storm damage discovery”
Takeaway: Don’t rely on a single, unverified assessment.
After severe weather, some contractors may arrive uninvited and offer free inspections.
While inspections themselves are not unusual, you should seek independent verification when a contractor immediately claims to have discovered significant damage that cannot easily be verified or insists that damage exists before a formal assessment has occurred.
Red flag #2: Offers to waive your deductible
Takeaway: If it sounds too good to be true, it usually is.
A common post-storm sales tactic involves promises such as, “We'll cover your deductible.”
While this may sound appealing, deductible waivers are often associated with inflated invoices, questionable billing practices, or compliance concerns. If a contractor promises to eliminate your financial responsibility entirely, it's worth asking additional questions and consulting your insurer before proceeding. One common tactic is intentionally or fraudulently inflating repair costs to “cover” the deductible. In practice, this is both ineffective and distorts the Insured-Insurer relationship.
Red flag #3: Assignment of Benefits (AOB) Agreements
Takeaway: Understand what rights you may be signing away.
One of the most misunderstood documents in the recovery process is an Assignment of Benefits, commonly known as an AOB.
These agreements may transfer certain insurance-related rights from the property owner to the contractor. In some cases, this can give the contractor significant authority over portions of the claim process.
Before signing any document that references insurance proceeds, claim payments, or assignment of rights, you should carefully review the agreement and understand exactly what authority you may be transferring.
Red flag #4: Large upfront payments
Takeaway: Be cautious with significant prepayment requests.
Be cautious when contractors request substantial deposits or full payment before work begins.
While some upfront payment may be reasonable depending on the project, large cash requests or demands for payment before the scope of work is verified can increase the risk of incomplete, delayed, or abandoned projects.
Red flag #5: Inflated or constantly changing estimates
Takeaway: Require clear documentation for cost changes.
Repair scopes sometimes evolve as additional damage is discovered. However, repeated estimate revisions without clear explanations, significant cost increases without documentation, or scope expansions that seem disconnected from actual storm damage deserve closer scrutiny. You should request written explanations for major changes and maintain clear documentation throughout the project.
Practical steps to protect your organization from contractor fraud
The goal is not to slow down recovery, but to ensure decisions are made with complete and accurate information.
Consider these best practices after a severe weather event:
- Contact your insurance carrier as early as possible before committing to significant repairs.
- Verify contractor licensing, insurance coverage, and professional credentials.
- Request references and check previous work whenever possible.
- Obtain multiple estimates wherever feasible and always for larger repair projects.
- Review all contracts carefully before signing.
- Ensure agreements outline the scope of work, costs, timelines, and responsibilities.
- Avoid signing documents that transfer claim authority or insurance rights without fully understanding the implications.
- Keep detailed records of inspections, estimates, invoices, and communications.
- Maintain regular communication with your insurer throughout the repair process.
- Be cautious of high-pressure sales tactics that demand immediate decisions.
What to do if you’re concerned about contractor fraud
If something doesn’t feel right during the repair or claims process, it is important to pause and seek clarification before moving forward. Instead:
- Contact your insurance carrier immediately.
- Document all conversations, project changes, and payment requests.
- Preserve copies of contracts, estimates, invoices, emails, and text messages.
- Seek clarification from legal counsel or trusted advisors if necessary.
- Report suspected fraud or deceptive practices to appropriate authorities when warranted.
Many organizations hesitate to raise concerns because they worry they may be misunderstanding the process. In reality, early communication and documentation are often the most effective ways to prevent small concerns from becoming larger problems.
Takeaways for storm season
Severe weather will continue to impact communities across the country. While storm damage is often unavoidable, confusion and complications during the recovery process can be reduced with preparation and awareness.
Who you trust to repair your property matters. The right contractor can help move recovery forward efficiently and professionally. The wrong contractor can create challenges that linger long after the storm has passed.
At Church Mutual, we work alongside organizations like yours throughout the claims process —helping you stay informed, avoid common pitfalls, and make more confident decisions from the start.
Storms may be unpredictable. The recovery process doesn’t have to be.
.jpg)
