Insurance companies have sophisticated algorithms that allow them to detect fraud. Rather than just paying, an insurance company will investigate any claims that look suspicious. Insurance companies carefully analyze claims histories — and not just claims that were filed within their own company. The industry maintains a collective database with information about all claims, and generally insurance underwriters and claims processors have access to it.
Red flags may include:
- A similar claim made before cancelling the last policy
- Filing claims every few months
- Filing a claim against two policies covering the same thing
In some cases, fraud is more obvious than others. For example, a claim for lost, stolen or damaged property will be scrutinized when the insured can’t produce any documentation for the property in question. In such cases insurers might use private investigators to look more deeply into the claimant. PIs are inexpensive compared to the money that could potentially be lost to fraud, especially with large injury liability claims.
Private investigators for insurance fraud will follow up on any suspicious claim indicators to detect fraud. Some of these indicators that automatically flag a claim as suspicious include:
- Claimant is in financial distress – maybe they are worse off than they were when the policy started — or maybe they file a claim shortly after the beginning of the policy
- Claimant increased his or her policy limits right before an alleged loss occurred
- Accident claims that can’t be supported, like a slip and fall that no one witnessed
- Missing police reports
- Delayed reporting of a claim
- Documentation that has been altered or tampered with
- Valuable items removed from the premises shortly before a fire loss
None of the items on this list prove fraud, but they do provide reasons to inspect a claim more carefully. A private investigator will dig into each claim to determine whether there is real evidence or fraud, or just odd circumstances. For example, did you lend your 50” flat screen TV to a friend the night before their Super Bowl party and then return home to see your house own on fire? Technically, the valuable item was removed right before your fire loss, but there is a legitimate explanation. A private investigator can clear up any misgivings on the part of the insurance company by uncovering the truth in details, saving them a ton of money and making sure the insured receives the proper reimbursement.