If auto insurance wasn’t already confusing for many consumers, every state jurisdiction has their own rules and regulations. This often…
Even though there is a high risk that a staged accident can injure law-abiding drivers and/or cause a substantial increase in their insurance premiums, another victim in this dangerous charade is insurance companies. Luckily, insurance companies are rigorous when it comes to uncovering insurance fraudulent claims.
How Insurance Companies Reveal Fraud
The most common preventative measure insurance companies use against insurance fraud is to get law enforcement’s help to make sure that the accident details are correct, and even get the NICB involved if they think there has been a faulty claim.
Insurance companies also have a list of suspicious loss indicators, and have agents who are on the lookout for anything on this list. Common red flags insurance agents look out for are:
- Someone who doesn’t act distraught or even slightly flustered after submitting a large claim
- Someone who only has handwritten receipts for auto repairs or doctor’s visits
- A claimant who adds to their auto insurance policy a few days before submitting a claim
- A fire-damage claim for a car where the fire started immediately after a minor car accident
- A medical claim submitted by an employee with a temp job that ends soon
They also analyze past records of claims from these drivers. Do they file a lot of claims per year, and do these claims always follow a specific pattern? For example, the driver might claim that the person behind them slammed into them, hurting their back and neck. If they’ve seen this claim from them many times before, this is an obvious red flag.
Insurance companies often hire private investigators to do extensive background searches on the claimants, interview witnesses, and look at any past criminal records.
Another tactic they use to detect fraudulent claims is to look into billing patterns from medical or auto claims. If clinics or physicians charge a suspiciously high amount for services, charging more than once for the same service, or bill insurance companies for services never offered, these are huge red flags. Advanced computer programs can weed out these suspicious claims, helping insurance companies avoid fraudulent accident claims.
In auto repair claims, some shops might give in to people who want to add the cost of repairing something to their deductible, after they have already paid it. Or, the shop will put a used part on a car, and bill the insurance company for a new part. Most car repair shops wouldn’t get involved in these practices, but some will. Computer systems can also pull up suspicious activity dealing with car repair claims as well.
Last, insurance companies will often go as far as hiring special investigation units to perform a battery of tests to see if the claim could be fraudulent. They make sure the injuries match the severity of the accident, investigate the damage present on the vehicle to see if it matches the accident report, and check into a claimant’s financial history. If this person is behind on car payments, the report is flagged as possibly fraudulent.
Thankfully these type of thorough investigations and fraud detections have lead to a decrease in the amount of payouts insurance companies are forced to make on faulty claims. The end results are lower insurance premiums for everyone and criminals are less motivated to stage accidents and file fake insurance claims.