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How insurers defend against fraudulent property damage claims

On Behalf of | Oct 7, 2024 | Insurance Law |

Fraudulent property damage claims can cost insurers a large amount of money and result in higher insurance premiums. To protect themselves and their clients, insurers must take steps to identify and defend against false claims. 

Thorough claim investigation

A thorough investigation is an effective way to defend against fraudulent claims. Insurers can review the details of the claim, including the type of damage, the timing of the incident, and the policyholder’s claim history. If anything seems suspicious, it’s important to gather more evidence. You may need to speak with witnesses, review security footage, or consult with trained professionals to assess the damage.

Using technology to detect fraud

Many companies now use data analytics and artificial intelligence (AI) to identify patterns of fraud. Tools such as AI can flag unusual claim activity or inconsistencies in a policyholder’s history. 

Common red flags for fraud

There are several red flags when it comes to fraud to be on the lookout for: 

  • Damage that doesn’t match the reported cause (e.g., water damage claimed after a fire)
  • Inconsistent or exaggerated details in the claim report
  • Claims for damage existing before the reported incident
  • High-value claims submitted soon after purchasing a new policy

Partnering with third-party investigators

In complex cases, insurers may choose to work with third-party investigators. Investigators can provide an unbiased view and uncover information that the insurer’s internal team missed. They may also help gather more evidence or provide testimony if the case goes to court.

Protecting the insurer

Fraudulent property damage claims pose significant risks to insurers, but proactive measures can mitigate their impact. By staying vigilant and constantly improving detection methods, insurers can reduce the occurrence of false claims. This allows them to maintain stability in their policies and provide reliable service to genuine policyholders.

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