WASHINGTON — A surge in contractor fraud following major disasters in 2024 and 2025 has prompted several states to strengthen licensing requirements for restoration contractors, including new bonding, insurance, and background check requirements intended to protect homeowners from unscrupulous operators.
Contractor fraud following disasters typically involves unlicensed contractors who solicit work door-to-door in disaster-affected areas, collect large upfront payments, and then perform substandard work or disappear without completing the job. The Federal Trade Commission reports that contractor fraud is one of the most common forms of disaster-related consumer fraud.
Florida, Texas, and Louisiana — states that have experienced significant disaster activity in recent years — have enacted new legislation requiring restoration contractors to obtain specific licenses for water damage, mold, and fire restoration work. The new licenses require applicants to pass written examinations, demonstrate field experience, carry specified levels of liability insurance, and submit to criminal background checks.
Several states are also requiring restoration contractors to register with the state's contractor licensing board before soliciting work in disaster-affected areas, and are imposing significant fines on contractors who solicit work without proper registration. Some states have established rapid licensing processes to allow out-of-state contractors to obtain temporary licenses when responding to declared disasters.
The Restoration Industry Association has supported the licensing reforms, arguing that stronger licensing requirements protect both consumers and legitimate restoration contractors by reducing competition from unqualified operators. The RIA has also developed a model licensing framework that states can use as a template for their own legislation.
