Insurance Companies Can Easily Spot Fraudulent Insurance Claims

by Hank Coleman

Fraudulent Insurance Claims Are Easily SpottedSpotting fraudulent insurance claims is an important job for most insurance companies. The mounting losses from false and fraudulent insurance claims reported by customers can reach into the billions of dollars each year.

Money lost from fraudulent insurance claims comes directly out of the insurance companies’ coffers and results in an overall insurance cost increase for honest customers. Many people mistakenly think that they can get away with filing a false claim, but the insurance industry watches claims meticulously.

Insurance companies in the United States watch for suspicious indicators in order to help them prevent losses from fraudulent insurance claims cases. For example, an insurance company may conduct additional investigations before paying out a suspicious claim if the policyholder has a high debt load.

Fraudulent insurance claims can cost billions of dollars each year. Honest customers pay the price in higher premiums. #insuranceClick To Tweet

This is only one of many characteristics that can present a red flag to an insurance company. Insurance companies also look for patterns in the frequency, type, and amount of insurance claims that a person makes. Most large insurance companies have been in business for decades, and they have large historical records that they can draw from.

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Easily Spot Fraudulent Insurance Claims

Insurance companies are famous for teasing out data from their large databases in an attempt to try and understand when a person is most likely to submit a claim. People who do not follow the typical pattern tend to set off warning signals of potential fraud to insurance companies.

Home insurance companies are constantly on the lookout for fraudulent insurance claims from homeowners for arson and fire damage. Claims of damages sustained due to fire cost the insurance industry in America approximately $1 billion each year.

As with all insurance claims, your insurance company will look at trends and any indicators of fraud that are present during their investigation. For example, one indicator that an insurance company may look for is if you happened to move important papers, valuables, or sentimental objects from your home before a fire.

While an insurance company will not always assume that you are filing fraudulent insurance claims on damage to your home, it is important to realize that insurance companies are a business that must make a profit. They will, of course, not make as much money if they are paying out too many claims or fraudulent insurance claims.

So, they will most likely investigate claims especially if you have a history of filing them or if there appears to be something out of the ordinary with yours. One of the best things you can do is to cooperate fully with an investigation and provide receipts or documents if necessary. Cooperating with your insurance company if there is an investigation can help speed up your claims process and help you to receive a payout faster.

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About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and a graduate certificate in personal financial planning. Email him directly at Hank[at]MoneyQandA.com.


Hank Coleman has written 592 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.


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{ 2 comments… read them below or add one }

Jen

It is a great article for anyone who is thinking of taking their chances with an insurer. There are many ways of them checking your details and circumstances. Many people are found to be claiming for whiplash after an auto accident and in the same time publishing photos of themsleves climbing mountains.

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Jacob Soderman @NPI

Great info. Such fraudulent claims actually cost Americans tens of billions of dollars a year. It is very unfortunate that it had become more prevalent mainly because to a sour economy that’s causing some to resort to such desperate measures to bring in a little cash.

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