AUSTIN — Texas enacted legislation in January 2026 strengthening criminal penalties for contractor fraud following storms and natural disasters, responding to a surge in complaints about unlicensed contractors and fraudulent repair schemes that followed the state's severe weather events of 2025.
The legislation increases the criminal penalty for contractor fraud involving insurance claims from a Class A misdemeanor to a state jail felony for first-time offenders, and to a third-degree felony for repeat offenders. It also requires contractors to provide a written contract before beginning any work on a storm-damaged property.
The law establishes a state contractor fraud hotline operated by the Texas Department of Insurance and the Office of the Attorney General, allowing homeowners to report suspected fraud and access a database of licensed contractors in their area.
Texas Insurance Commissioner Cassie Brown said in a statement that contractor fraud following storms costs Texas homeowners and insurance carriers hundreds of millions of dollars annually and undermines the integrity of the property insurance system.
The Restoration Industry Association of Texas supported the legislation, noting that fraudulent contractors damage the reputation of legitimate restoration professionals and undermine consumer trust in the industry. The association is working with the Texas Department of Licensing and Regulation to develop a voluntary certification program for storm restoration contractors.
