Insurance fraud affects everyone — it raises premiums and diverts claims resources away from legitimate claimants. But policyholders in California are also targets of fraud, particularly after major disasters when unlicensed contractors and unethical adjusters prey on homeowners in urgent need.
After a major disaster, be alert for: contractors who pressure you to sign immediately or who promise to waive your deductible; assignment of benefits (AOB) schemes where contractors file claims in your name without your full understanding; adjusters who are not properly licensed; and fake insurance companies offering extremely low premiums.
Assignment of benefits (AOB) is an agreement that gives a third party the right to file claims and receive payment directly from your insurer. While AOB has legitimate uses, it has been heavily abused in California, particularly for water damage and roofing claims. Once you sign an AOB, you may lose control of your claim and any disputes about it.
Before signing anything after a loss: verify the contractor's license through your state licensing board; confirm any public adjuster is licensed through the California insurance department; do not sign any document you have not read and understood; and be especially cautious of any contractor who shows up unsolicited at your door.
If you suspect insurance fraud — by a contractor, adjuster, or even your own insurer — report it to the California insurance department's fraud division. Reports can be made anonymously. Reporting fraud protects you, other policyholders, and the integrity of the claims process. The National Insurance Crime Bureau (NICB) also accepts reports at 1-800-TEL-NICB.
The Insurance Professor is trained on California insurance law and regulation. Ask about your policy, your claim, or your rights.
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Regulatory resource: California Department of Insurance — https://www.insurance.ca.gov. The Insurance Professor provides education only — not legal or insurance advice.