Stuff the turkey, deck the halls, hang the lights and get ready.

With the holiday season upon us, most adjusters know what to expect…a high rise in fire and theft claims.  Arson and suspected arson account for nearly 500,000 fires a year, or one of every four fires in the U.S. (National Fire Protection Association) and approximately one in 10 people agree it’s ok to submit claims for items that aren’t lost or damaged (Insurance Research Counsil-2000).  So what’s an adjuster to do?

First, we must realize that acting as independent adjusters, we are the eyes and ears of the insurance carrier.  It is our duty, both professionally and legally, to investigate and report suspected fraud to the proper person for each carrier we represent.

There are commonly two types of fraudulent claims.  The first is considered “hard” by the industry and includes intentional acts to stage an event, accident or injury. The second type is “soft” fraud, which includes an exaggeration on the part of the insured for items stolen or damaged or inflated injuries sustained by a third party.

Spotting the “red flags” on seemingly legitimate claims is our first weapon of defense in these types of fraud-related activities.  The indicators below should help you to isolate those claims which have unanswered questions.  PLEASE NOTE: Even the presence of several of these indicators does not mean that fraud has been committed.  These are simply tools which you should use to determine if further investigation and notification to the carrier is justified. This partial list was provided by the National Insurance Crime Bureau.

General Indicators of Property Fraud:

• The insured is willing to accept an inappropriately small settlement rather than document all claims losses
• Insured contacts agent to verify coverage just prior to loss date
• Commercial losses that involve seasonal inventory or equipment which occur at the end of the selling season

General Indicators of Fire-Related Fraud:

• Building and/or contents were for sale at the time of loss
• Suspicious absence of the family pet
• Commercial losses include old or non-saleable inventory
• Insured is experiencing financial difficulties, e.g. bankruptcy, foreclosure.
• Fire scene investigation reveals absence of remains of expensive items, sentimental items or everyday items such as appliances or food supply in the cabinets.
• Fire alarm and/or sprinkler system failed to work at time of loss
• Fire department reports fire cause as suspicious or unknown

General Indicators of Burglary/Theft Fraud

• Losses include total contents of home/business including items of little or no value.
• No police report or police were not notified
• Insured over-document losses with receipts for every item, including older items
• Insured’s inventory list differs significantly from the police report
• Insured provides receipt or documentation of inexpensive items, but nor documentation on items of significant value.

If three or more of these indicators are present at a loss or if additional indicators are present, you should notify the carrier immediately.

Keep these items in mind when adjusting claims and have a safe, happy holiday season.

Mariposa Guest Blogger
Melissa Beckman
Account Manager who lives in Kentucky

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