Restoration Fraud

If insurance is paying for contractors to fix damage to your home, be aware of restoration fraud. A vendor may overbill for the job under the assumption that your insurance company will pay the full amount. Recognize signs of potential fraud and never pay up front.

Renovation is big business nowadays. And with big business comes a greater potential for fraud. According to the Canadian Home Builders' Association some of the steps you can take to prevent fraud include the following:

  • Get everything in writing – a written contact gives you peace of mind.
  • Hire professional contractors. Check their references, their past work and if they haveWorkers' Compensation coverage.
  • Do your homework – take control and understand the key steps in reconstruction.
  • Don't make an underground deal – a cash payment may seem easier, but it can also put you at risk.1

On the Job: What to Watch For

Once you have confirmed a contractor and work is about to start, be an active project manager. Things you should be on alert for before, during and after your renovation project include:

  1. A request from the contractor to pay the full value of the quote up front
  2. Extra work at any point in the project that was not included in the original price
  3. Necessary building permits not being issued or not being posted for significant construction projects
  4. Any "unforeseen problems" that arise (could these have been anticipated?).

Page Sources

Coalition Against Insurance Fraud – Agent and Insurer – 5 Top Contracting Scams

Let's Fight Fraud Together

Each year, fraud costs Canadians more than $1 billion. At least 15% of what you pay for insurance ends up covering fraudulent insurance claims.

Because insurance fraud costs everyone, IBC works to fight fraud every day of the year. You can also take control

  1. Recognize it. There is no such thing as a typical fraudster. The types of insurance fraud and those who commit it are both numerous and diverse.
  2. Report it. If you know about or suspect insurance fraud, you can anonymously report it to IBC by filling out a confidential online form or calling (24/7): 1-877-IBC-TIPS (1-877-422-8477).
  3. Stop it. Canada's home, car and business insurers are constantly working to develop new ways to help stop insurance fraud. You can help stop insurance fraud by reading fraud alerts.

Every March, IBC and Canada's home, car and business insurers partner with the federal government's Competition Bureau to raise consumer awareness about this serious and costly crime.



1Canadian Home Builders' Association – Advice from Homeowners