Digital, mechanical & physical clues that hint at auto insurance fraud
Around 15% of all auto premiums paid are used directly to cover undetected fraudulent claims, J.S. Held reports.
In financially dire times, more drivers attempt to alleviate monetary pressures by filing fraudulent insurance claims to cover their auto repair bills, according to J.S. Held, which reported many of these fraudsters erroneously believe that deep-moneyed insurance companies are the only victims of these crimes.
However, auto insurance fraud affects more than just insurance companies, as around 15% of all auto premiums paid are used directly to cover undetected fraudulent claims, J.S. Held reported.
One of the most common forms of insurance fraud, according to J.S. Held, involves policyholders using insurance to cover auto damages they caused or to have mechanical issues fixed.
According to J.S. Held, insurance companies have a host of ways to uncover fraudulent auto claims. These include inspecting the vehicle to ensure damage aligns with the policyholder’s version of events as well as more advanced digital tools that can help insurers recreate and verify the story.
Physical clues
Reconstructing a collision is heavily dependent on physical evidence, such as paint transfers, tire marks, and directional scratches and dents.
Big picture pieces of a story can be confirmed or refuted with a visual inspection. For example, if an insured claimed to have been side-swiped, does the damage correlate to the side of the road they were parked and does it correspond to the correct location on the driver’s side and rear of the vehicle?
Once big picture statements are confirmed, the investigation should delve into the details such as damage patterns, height and transfers.
J.S. Held noted that most vehicles are finished with a clear coat, which prevents paint from transferring to other vehicles in excessive amounts. However, poles, barriers and other obstacles typically don’t have a clear coat and will transfer considerable amounts of paint if a car hits them. As such, excessive paint transfer is a strong indication of fraud.
Chemical testing can also be done to determine if a paint sample matches any automotive paints commonly used in the past 20-30 years.
Digital clues
From event data records (EDR) and advanced driver-assistance systems to aftermarket dash cams, technology-laden vehicles can give claims adjusters a next-level view into the facts of an accident.
According to J.S. Held, EDRs only record data when a vehicle is running. This means that in most hit-and-run claims, there will be no EDR data. If this data does exist, and it is consistent with the damage, it could cast significant doubt on a policyholder’s claim.
In addition to requiring the vehicle to be running, EDRs will only capture events that are severe enough to trigger the device’s recording feature.
“Overall, if the damage is consistent with a relatively severe collision, and no event is recovered, this would indicate that the vehicle was most likely off at the time of the collision, and the reported sequence of events is likely untruthful,” J.S. Held’s report noted.
Automotive infotainment and telematic systems can also give investigators clues, according to J.S Held. For example, GPS logs can detail the data, time and location of a reported loss. If a vehicle’s travel log shows it was at a repair shop hours before it was involved in a hit-and-run, it is a strong indication that there was pre-existing damage to the vehicle.
Mechanical clues
In addition to physical and digital tools, mechanical issues can also help claims investigators uncover fraud, J.S. Held reported. While they don’t immediately signal an attempt a fraud, damage that is unrelated to a collision can serve as a potential motive. The vehicle’s condition can also serve as a point of conversation with a policyholder, who might inadvertently blunder their story under questioning.
Unrelated damage to watch for includes rust, major mechanical or electrical issues and deferred maintenance, according to J.S. Held. During examinations, investigators often access diagnostic trouble codes, which can help give a fuller picture of the vehicle’s condition.
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