How To Spot Insurance Fraud

So for an insurance adjuster, what are the common red flags to look for in discovering fraud in a claim? When we investigate fraudulent claims there are a number of things that pop up that are low-hanging fruit, easy things to discover that might indicate fraud in a claim. 

First of all, if you look at items missing or items damaged and you look at the social media of the potential claimant, you might find that those items are already shown as being damaged prior to the claim. You may also find that items are described as a high value or a certain brand of a product may not be that product in the postings of that person. You can also look to see if there were recent yard sale purchases. A lot of times on a homeowner’s claim, somebody will go and buy a bunch of cheap items to stage their house prior to the claim so that it looks like there were a lot of things there, which may be there weren’t afterward. 

You also want to look at receipts. You can find that receipts may be fraudulent by looking to verify things like sales tax. Is the sales tax amount correct for the purchase price? Is that the correct percentage for that jurisdiction or was it just a made-up receipt? If they’re high-value items with no receipts that’s another red flag. Look to see what was the payment method and purchase valuation, was it paid in cash? Was it paid with a credit card? Where are the records for those payments? If there’s a bunch of high-value items that were paid with cash, but they buy everything else with credit cards. What’s the rationale behind that? 

Also, take notice of the location of sentimental items and important documents during this event such as birth certificates, wedding albums, passports, car titles, and things that may have been removed from a car or from a home before the damage incurred to make sure that those items were not just stashed offsite. Even things like pets, were the pets magically at some pet resort when the fire happened? Those types of things. Also, look to see if there’s financial distress for that claimant. Are there hidden judgments? You can run a credit report to see if there’s debt but you also can find hidden judgments by looking at things like a title search on the property or judgments in the public record to see if that person has a sudden or recent civil judgment against them. Even things like colleagues, are there colleagues that have posted things about them discussing distress or discussing challenges in their life? Insurance claims are a touchy area. You don’t want to challenge a claim when there’s a valid reason to pay it, but on the other hand, you want to protect your insurer from paying a claim or paying too much for a claim when there may be fraud involved.


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