RMIIA News Releases

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Contact: Carole Walker, Executive Director
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Insurance Industry Group Alerts Colorado Consumers Not to Fall Prey to Apparent Insurance Scam Following Windsor Tornado

June 11, 2008 – Colorado consumers need to be aware of an insurance scam that appears to be operating in the aftermath of the Windsor tornado.  The would-be victim didn't fall for it, but the woman (who doesn't want to be identified) hopes other people don't become prey to it.

Here's how it worked: The phone rang at 8:30 p.m. on a Sunday night with a call from someone claiming to represent her insurance company out of an office in St. Louis, it all seemed a little fishy. The Windsor resident had filed a homeowners' insurance claim for damage, but the man told her she would need to wire money immediately if she wanted her claim to be processed.  He said her insurance had lapsed.  But the woman knew she had paid her annual premium and the caller didn't even know the name of her mortgage company. She told him she would call her agent to find out what was going on, but he insisted she needed to deal directly with him. In fact, she checked with the company and the call was indeed a scam.

“Unfortunately high-profile disasters such as the Windsor Tornado often draw scam artists out of the woodwork attempting to take advantage of victims made more vulnerable by a difficult and confusing situation,” says Carole Walker, executive director of the Rocky Mountain Insurance Information Association.  “Consumers should be aware that insurance companies would never ask them to wire money to pay for lapsed coverage to settle a claim.  They should always check with their agent or company representative to verify suspicious contact requesting money or personal information.”  Disaster fraud takes many forms, from disreputable contractors to other vendors looking to make a quick buck.

The Rocky Mountain Insurance Information Association has some general tips for avoiding an insurance scam or contractor fraud:

If you receive a call you think might be a scam:

• Get the caller's full name and ask for a number where he or she can be reached.

• Call your agent or company representative to confirm your coverage, verify the information and identity of the caller.

• If you determine that the call was a scam, report it to the National Insurance Crime Bureau (NICB) at 1-800-TEL-NICB or go online to report fraud at www.nicb.org.

• You should also report it to the Colorado Attorney General's Office at http://www.ago.state.co.us/index.cfm.html.

There are other types of scams perpetrated by contractors who try to get you to commit to having them do work on your home and then either do a shoddy job or just leave with your money.

Here are some tips to avoid contractor fraud:

• Get more than one estimate. Don't be pushed into signing a contract right away.

• Get everything in writing. Cost, work to be done, materials, time schedule, guarantees, payment schedule and other expectations should be detailed.

• Demand references and check them out.

• Ask to see the salesperson's driver's license and write down the license number and license plate number.

• Ask for proof that the contractor is bonded, carries liability insurance, and covers his/her workers with workers compensation insurance.

• The contractor's business card should have a verifiable street address and office phone number.

• Never sign a contract with blanks; unacceptable terms can be added later.

• Never pay a contractor in full or sign a completion certificate until the work is finished. Request a lien waiver indicating the contractor has paid its subcontractors and suppliers.

• Insurance coverage may be rendered void if intentional misrepresentation by a policyholder is discovered.

• If you believe you have been approached by an unlicensed contractor or adjuster, or have been encouraged to fabricate an insurance claim, contact your insurance company or call the National Insurance Crime Bureau Hotline at 1-800-TEL-NICB (1-800-835-6422).

For more consumer information on insurance topics visit www.rmiia.org.

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Rocky Mountain Insurance Information Association is a non-profit consumer information organization. Affiliated with the Insurance Information Institute, RMIIA has been serving consumers and the media since 1952.