Insurance scams have unfortunately become standard across the country, leaving many Americans grappling with unexpected losses. In 2021, the Federal Trade Commission discovered that consumers reported $5.8 billion in losses due to fraud—a 70% increase in fraud-related losses compared to 2020.
Despite the national reach of these scams, certain states are more at risk than others. For several reasons, Ohio has become one of the most targeted states in the country.
In this article, we dive into the different types of insurance scams Ohio residents should be wary of, what to do if you encounter fraudulent behavior, and the steps you can take to protect yourself and your home.
Contractor Fraud: The Leading Insurance Scam in Ohio
One of the most common insurance scams today is contractor fraud, a phenomenon that takes many forms but always ends with payment to a contractor for work they didn’t complete correctly or at all. In the last two years, a staggering $82 million was lost to contractor fraud, making it one of history’s most effective and dangerous scams.
Ohio is a more commonly targeted state for contractor fraud due largely to the severe weather it withstands throughout the year and the number of opportunities it creates for fraudulent contractors to take advantage of homeowners.
Did You Know: Ohio isn’t the only state where severe weather attracts fraudulent contractors. Following significant weather events, research shows a significant spike in contractor fraud cases nationwide.
5 Key Warning Signs of Contractor Fraud
Homeowners in Ohio should remain educated about the warning signs of contractor fraud to avoid falling victim to these scams. We’ve listed some key warning signs of scams below.
- The contractor offers a low starting bid. Scammers are known for offering low prices early on and then finding additional problems that increase the overall cost after work has begun.
- They ask for a large or full down payment before starting work. In many cases, this tactic allows them to take your money and leave without beginning work.
- They use high-pressure tactics. Scammers often offer special deals or discounts if you pay upfront or sign the day of to lock you into the work before you’ve had a chance to research their company and determine if they’re reputable.
- They seem overly interested in your insurance coverage. Asking questions about previous claims or your premium amounts usually indicates a contractor might have an ulterior motive.
- They use cheap or substandard materials. If the quality of the materials or work the contractor is doing on your home isn’t up to par, they may be trying to complete the job as quickly and cheaply as possible while still charging full price to your carrier.
Did You Know: The roof is often the most vulnerable of all the areas of a building scammers can target. This area is often expensive to repair and hard to access without the proper tools, making it easy for scammers to lie about or cause damage without the owner finding out.
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How to Prevent Contractor Fraud
There are steps you can take as a homeowner to protect yourself from falling prey to a home improvement scam.
- Always stay informed. Follow industry-leading fraud prevention partners like Central Insurance on social media for the latest updates on scamming trends and tips for staying ahead of fraudsters.
- Always get a written contract. Protect yourself from fluctuating prices, unfinished or substandard work, and drawn-out deadlines by creating a well-documented contract before embarking on the work.
- Get your insurance carrier involved. Insurance carriers like Central have the tools and national partnerships to properly deep dive into any contractor’s history. From past cases of fraud to contractor licenses and insurance coverage, your carrier can help determine whether a company is reputable.
What do I do if I think my contractor is scamming me?
If you’ve accidentally gotten in too deep with a contractor and are worried they’re scamming you, your first step is to alert your insurance carrier. Industry-leading carriers like Central will be able to determine if the contractor has a prior history of bad behavior and will connect with other carriers across states to identify any patterns in their approach.
Learn More: Who Is Most at Risk for Contractor Fraud?
Homeowners can also file a complaint with their state’s Department of Insurance. These organizations often team up with insurance carriers like Central to investigate the contractor and determine if they are fraudulent.
Ohio Residents: You can file a fraud complaint on the Ohio Department of Insurance website.
Other Common Insurance Scams in Ohio
Although contractor fraud is the most significant insurance scam in Ohio today, there are plenty of others residents should be looking for.
Auto Insurance Scams
Auto insurance scams come in many shapes and sizes. For example, a driver might claim an accident occurred that didn’t receive a payout for existing damage to their car. Others might exaggerate injuries after a real accident to pocket the insurance money allotted to their care. If you’re a driver, be on the lookout for falsified or exaggerated claims against you, as these can contribute to larger insurance fraud scams and drive up your auto insurance premiums.
Medical Fraud
Medical fraud can take many forms. Whether it’s patient-, attorney-, or provider-led, these scams most commonly involve trying to gain a larger payout from insurance companies for existing or even falsified injuries or conditions.
The most common of these scams is medical fraud initiated by a medical provider. In these cases, a doctor might recommend extensive or unnecessary tests or even procedures to drive up the cost of the bill. Patients should remain vigilant against these kinds of scams and contact their insurance companies or their state’s Department of Insurance to report suspicious activity.
Learn More: A Deep Dive Into Medical Fraud
Renter’s and Homeowner’s Insurance Fraud
In these cases, homeowners or renters might submit claims for thefts or damages that didn’t occur. While this might seem like a victimless crime only impacting an insurance company, the truth is falsified claims contribute to rising premiums across the state.
Lean on Your Insurance Carrier for Protection
Insurance is an investment designed to protect you when the worst happens. At Central, we believe insurance scams fall within that category. That’s why we have a team of designated fraud prevention specialists working tirelessly to protect our policyholders from fraudulent contractors, drivers, healthcare providers, and more.
With cutting-edge analytics systems and partnerships with organizations ranging from the Geospatial Insurance Consortium to the National Insurance Crime Bureau, we’re committed to protecting our insureds’ well-being and peace of mind.
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