Facts of Loss Red Flags
June 15, 2015
Fraud can be easy or difficult to determine, depending on the expertise of the person committing the fraud. The use of a checklist to review the claim and spot red flags can be the first step in identifying a potential fraud claim so that it can be passed on to investigators to determine what actually happened. The following checklist relates to the facts of the loss; presented are indicators that things may not be as they seem. More than three checks indicate that referring the claim to the investigators is a good idea; it may not be fraudulent, but it should be further investigated.
____Witness version does not agree with claim as presented
____Presence of an overly enthusiastic witness at the scene of the incident
____No police report
____All injuries are subjective.
____CPT codes appear inflated or "up-coded."
____Losses occur just after coverage takes effect.
____Losses occur just before coverage ceases.
____Losses occur just after coverage limits have been increased.
____Losses include a large amount of cash.
____Commercial losses include old or non-saleable inventory.
____Building is in deteriorating condition.
____Building is located in a deteriorating neighborhood.
____Fire scene investigation suggests property or contents were heavily over-insured.
____Fire scene investigation reveals no remains of noncombustible items of scheduled property.
____Fire scene investigation reveals no remains of expensive items used to justify an increase of limits.
____Fire occurs at night.
____Fire occurs after 11 p.m.
____Commercial fire occurs on holiday, weekend, or when business is closed.
____Fire alarm fails to work at time of loss.
____Sprinkler system fails to work at time of loss.
____Insured over-documents losses.