Some fraudulent insurance claims are obvious right away. For example, a customer may call to claim he or she was in a hit-and-run accident. They may describe the car as red, but pictures from the scene show blue paint transfer. While the agent managing the claim may never know the truth of what happened, a customer’s motive for filing a false claim is usually financial. If the customer recently lost their job or has excessive monthly car payments, that may be their incentive to offload the vehicle. Most claims do not involve fraud, but agents should make themselves aware of the following warning signs.
The age of the customer’s insurance policy can be a telling sign. If the policy is less than a month old or is about to expire, this can call for some additional inquiries on the agent’s part. Another example of an unusual coverage circumstance is if the insured took out an excessive amount of coverage for the age and model of vehicle. An over-insured vehicle can be an indicator of fraud.
Vehicles Burned Beyond Recognition
If a vehicle is a smoldering shell, it warrants further investigation. Many believe setting a vehicle on fire will cover their tracks, but the source of the fire often survives. Other red flags for burnt vehicles include:
- The vehicle was found empty in an abandoned location
- Excessive amount of paper was found in the fire remains (i.e. potential insight into how the vehicle was set on fire)
- The insured was recently fired or is in a financial bind
Phantom Hit-And-Run Incidents
Customers often invent this type of false claim to cover up their own carelessness. If a customer damaged their vehicle by sideswiping a light pole, their rates will likely increase if they file the claim. However, if they say an unidentified vehicle forced them off the road to avoid a car accident, they may be able to avoid a rate increase. While the rules differ from provider to provider, several insurance companies do not increase rates for not-at-fault or uninsured motorist claims. If the customer cannot provide solid details about the other vehicle, the claim may be worth further investigation.
The issue with these fraudulent claims is they increase rates across the board for all motorists. Insurance companies have to pay out a certain amount of money depending on the individual’s insurance plan. The more customers that file false claims, the more funds insurance companies must allocate to them without cause. To learn more about reducing fraud through claims management, contact Actec.