Watch Out For These Scary Insurance Scams And Frauds (2024)

If you’re worried about werewolves, zombies and vampires this Halloween, just give them a full-size candy bar. What you really need to worry about are scammers, hackers, bandit tow truck drivers and other fraudsters hoping to take a bite out of your hard earned dough.

This monster mash of crooks costs the average U.S. family between $400 and $700 per year in increased insurance premiums, according to the Federal Bureau of Investigation (FBI).

And here’s one of the scariest things about scammers: They look like everyone else. You can’t identify them by ragged clothes, pointy teeth or distaste for garlic. Instead, these fiends look like roofing contractors and everyday tow truck drivers, and sometimes they’re the pleasant voice on the other end of your phone or behind the email waiting in your inbox.

The Wolf Dressed in Contractor’s Clothing

In the aftermath of heavy thunderstorms and hurricanes, scammers disguised as legitimate contractors prey on damaged neighborhoods with plans to run roof repair scams. The National Insurance Crime Bureau (NICB) warns consumers to watch out for fraudulent contractors hoping to take advantage of vulnerable people.

The typical scam works like this: Let’s say a severe hail storm hits your neighborhood and damages your roof. You are contacted by an unsolicited person (sometime they’ll knock on your door) who claims they are a contractor. They’ll often come in with a low-ball bid and pressure you to sign a contract on the spot and/or pay cash up front. Sometimes the scammer skips town with your payment. If they actually start repairs, it’s often shoddy or incomplete work with substandard materials.

Here’s how to avoid this type of scam:

• Coordinate with your insurance company. Make a home insurance claim for roof damage and have your insurance adjuster inspect the damage. If a contractor completes the repairs before your adjuster gets to look at the damage, your claim could be denied and you could be stuck paying out of pocket.
• Get more than one estimate. Don’t let a contractor pressure you into signing a contract.
  Work with licensed and insured contractors. Ask to see the contractor’s general liability insurance and check that the policy effective dates have not expired.
• Research your contractor. Check to see if they’ve had any complaints with the Better Business Bureau, ask for client references and check to see if they are a member of any local, regional or national roofing industry associations.
• Get a signed contract before the contractor begins any work. The contract should specify the cost, time schedules, payment schedules and any other guarantees or expectations. Do not leave any portion of the contract blank.
• Do not pay in cash. Also avoid digital payments like Cash App, Venmo or Zelle. It’s best to pay by check or credit card. Pay in full or sign a completion certificate only when the work is completed to your satisfaction and meets local building codes.
• Contact local authorities if you suspect a scam. You can contact the NICB or your state’s insurance fraud bureau.

The Ghastly Jump-In Passenger

Here’s a scheme that might make you believe in ghosts: After an auto accident, someone who wasn’t in the other car files an injury claim against you. In fraud-speak, this is called a “jump-in” and it’s a common scheme.

A typical scam works like this: You get into a car accident and exchange insurance information with the other driver. There are no witnesses and the police are not called to the scene. You later find out from your insurance company that a passenger is claiming injuries and hoping to get a settlement from your liability car insurance. You are positive this “injured” passenger was not in the car.

Here’s how to avoid the scam: With no police or witnesses, it’s really your word against theirs. The best thing to do is collect accurate information at the scene of an accident. Take pictures with your phone. Get a head count of everyone involved in the car accident, including drivers and passengers. If possible, get the names and contact information from everyone involved.

If there are any witnesses at the scene of the accident, ask for their contact information. You can also call the police and ask them to file a report.

If you believe someone is making an injury claim against your insurance and they were not involved in the car accident, speak with your insurance claims adjuster. Most car insurance companies have an investigative unit that looks into these types of problems.

Bandit Tow Trucks on the Prowl

There are plenty of unwelcome incidents that can leave you stranded on the side of the road, like a dead battery, flat tire or car accident. To make matters worse, there are unsolicited tow truck drivers waiting for the opportunity to cash in on a bad situation.

These drivers swoop in like saviors at the accident scene, only to hit you with an inflated bill. The NICB has issued warnings for drivers to be on the lookout for bandit tow trucks.

Here’s how the scam works: Your car is disabled from a car accident and a random tow truck driver shows up. Shaken up from the accident, you sign a blank document authorizing the tow, then the driver adds other charges for services that weren’t necessary or may not have been performed. You get stuck with a big bill.

Here’s how to avoid the scam: If you or the police did not call the tow truck, don’t deal with the tow truck operator and never give permission to an unsolicited tow truck to take your car. Before you hook up with a tow truck, make sure you get a printed price list, including daily storage fees and any miscellaneous charges that might apply. If the prices seem too high, ask the police or your insurance company to call a towing service for you.

Another good way to avoid bandit tow truck drivers is to get roadside assistance insurance, which you can get through your auto insurance, credit card or an auto club such as AAA.

Cyber Crooks Masquerading Tricks as Treats

As many of us adopted more online communications and e-shopping, cyber criminals have stepped up their efforts. There are more than 4,000 ransomware attacks per day since 2016, according to the FBI. That’s a whopping 300% increase since 2015, which saw 1,000 ransomware attacks per day.

Fraudsters often target your email inbox and cell phone as a means to steal your personal information. They used tried and true techniques like phishing, spoofing, spam and robocalls. Americans lost more than $54 million to phishing scams in 2020, according to the FBI’s Internet Crime Report 2020.

Here’s how the scam works: Emails, text messages and robocalls are often designed to prey on fear and anxiety. For example, during the pandemic, fraudsters offered up false promises of Covid cures and vaccine appointments. The goal is to get you to click on a link and download malware that can then steal your personal information from your phone or computer.

Here’s what you can do to avoid the scam: Don’t open emails, answer phone calls or respond to text messages from people you don’t know. Be wary of any links or attachments and do not give away personal information (such as passwords or banking and credit card information).

The Federal Trade Commission (FTC) warns that phishing scams may look like a company you know and trust, such as a bank, credit card company, social media site, online store or online payment website.

The FTC recommends these four steps to protect yourself from phishing:

• Use security software on your computer and set it to update automatically so it can handle new security threats.
• Set automatic updates for mobile devices.
• Use a multi-factor authentication for your accounts. This means you need two or more credentials to log in, such as a password and touch ID.
• Back up your data and make sure the backups aren’t connected to your home network.

You can also purchase insurance to help you recover from cyber attacks:

• Personal cyber insurance covers the expenses due to a range of cyber crimes, such as cyber extortion, data breach, online fraud and cyberbullying.
• Identity theft insurance covers expenses such as credit card application fees, legal fees and lost wages when you need to recover from identity theft.