8 Clever Ways Insurance Companies Spot Fake Claims

Let’s be honest: filing an illegitimate insurance claim can be tempting. Insurance premiums deducted on our bank accounts every four months aren’t cheap. Life’s unexpected catastrophes, which may not be covered by your premium, can also drain your savings when paid out of pocket. 

Wouldn’t it be nice to pretend that someone hit your car so you can claim auto insurance coverage than admit that you’re just drunk and you accidentally bumped into a tree? Or just stage a minor accident and fake an injury?

If you’re initially thinking of filing a fake insurance claim, here’s a friendly piece of advice: Don’t. Insurance companies are smarter than you think. Once you’re caught lying, you can face hefty fines and a dent on your record. 

Here are 7 ways insurance companies know whether your insurance claim is legitimate or not. 

1. They can read your body language 

Your lips may lie but your body language can tell the truth. You may not be aware but insurers have a secret list of 23 "suspicious loss indicators" that may signal the claim may be fake.

One possible indicator is a claimant who’s totally calm and stressed after submitting a large claim. Another obvious sign is the inconsistency of your report. 

Other suspicious behaviors also include increasing homeowners or auto insurance shortly before filing a claim and submitting handwritten receipts for repairs on covered items. 

2. They analyze your claims history 

If you’ve claimed a lot of losses throughout your lifetime, that might be a red flag. This is true when it comes to auto insurance and homeowners insurance. 

Aside from how many claims you have had in the past, insurers will also examine any patterns in your previous claims, such as their frequency and type. One good example is a medical claim submitted by a temporary employee whose term is ending. 

3. They inspect the damages thoroughly

If you report damages to your vehicle, they may inspect if the dents and scratches are consistent with the report. They may also conduct computer simulations on cars and homes damaged by fire to see whether the incident was staged or really accidental.

4. They hire private investigators

Private investigators aren’t just fictional characters. They do exist and they’re out to get pieces of evidence to prove you’re guilty or not. 

Many insurers and insurance brokers hand the case to the Special Investigation Units of SUIs, composed of people who have backgrounds of being detectives, police officers, and medical personnel. They research your background by digging through criminal records, interviewing witnesses, and inspecting pertinent sites. They can also investigate whether the car damages and injuries jibe with the accident report. 

5. They verify injury claims

One of the most popular insurance fraud scams is fake or exaggerated injuries involving vehicle crashes. An insurance company may have the means to determine if a claimant’s injuries match the reported accidents. They can also tell if you’ve falsified your billing. 

If they notice a particular provider submitting numerous claims over time for accident victims with a coincidentally similar condition and treatment, it can be flagged as fraudulent. 

6. They can stalk your social media

Claiming that you’re badly injured and wheelchair-mobilized? One Facebook post of you dancing the night away and you’re screwed. Insurers use social media to check up on doubtful claims. 

7. They can detect suspicious billing

Fraud often occurs through medical billing. Health providers may bill insurance companies for services never rendered or procedures that weren’t medically essential. Dishonest medical providers may also jack up the cost of certain services. 

Thanks to technology, computer systems have been developed to detect suspicious bills and patterns from medical establishments. Billing fraud also occurs in auto repairs. 

8. Evaluate their prospective employees’ histories

Not all fraudsters come from external sources. Some of the greatest scammers are dressed in tailored suits and ties, like insurance agents and insurance brokers themselves. 

Representatives, from life insurance agents to business insurance brokers may commit fraud by taking in their client’s money then pocket it without actually purchasing the policies on their behalf. Claims adjusters may also cut a lot of checks. 

Smart insurance companies prevent such incidents by running credit checks on all potential employees. If they have bad credit and/or financial issues, they’re more likely to commit fraud.

Author Bio: Carmina Natividad is one of the daytime writers for Insurance Advisernet, one of the largest and most reliable general insurance businesses in Australia, providing high-quality risk management advice for business owners. She enjoys writing practical tips and tricks, making complex finance and business topics easier to digest.