Car insurance is required by law. Insurance is meant to help save you money on an accident by spreading the risk to everyone paying into the system. But insurance often is the target of people trying to beat the system by filing fraudulent claims. Car Insurance companies often hire private investigators to find when a person may not have been entirely truthful on a claim.
Why Do Car Insurance Companies Hire Private Investigators?
While it costs car insurance companies to hire private investigators, often the cost to hire a PI is considerably less than what an insurance company might pay out on a fraudulent auto claim. Insurance companies often hire outside PI’s to conduct investigative activities when a “red flag” is triggered on a claim. Some people mistakenly believe that any claim over a certain dollar amount instantly triggers an investigation. In reality, car insurance companies hire private investigators whenever a claim doesn’t “pass the smell test.”
Red flags such as a claimant’s recent history of similar claims or a loss soon after increasing coverage will warrant more thorough investigation. Claims adjusters have a set criteria for when a claim should receive further scrutiny more than the standard investigation. Whenever a more thorough investigation is needed, a private investigator will often be hired to help.
How Do Private Investigators Help?
Not only do insurance companies save money by hiring private investigators, but they also combat the rampant fraud that occurs each year. From FBI statistics, non-health related fraud costs insurance companies around $40 billion per year, which translates to about $700 per household. PI save the insurance companies money and they also help the general public by minimizing the effects of fraudulent insurance claims.
PI’s use several investigative tools to help the insurance companies sniff out fraud, such as:
- Surveillance to verify the claim
- Medical reports/history search
- Previous claims/accidents search
- Insurance coverage analysis
- Witness interviews
- Physician’s billing search and analysis
- Claimant background check
How Does Insurance Fraud Happen?
Some of the more common car insurance fraud schemes include faking or exaggerating an injury that occurs during an auto collision, faking or planning the auto collision itself, or falsely reporting a vehicle as stolen.
False or exaggerated Injury claims are the easiest to fake and the hardest to detect. A person may have legitimately injured their back or neck during a collision, but medical personnel often have a difficult time confirming the true severity of an injury. A person can easily exaggerate the existence of pain and get a larger insurance payout than what is justified by their actual injuries.
Faking an auto collision or reporting a false vehicle theft are less frequent but can be attractive to people in desperate situations. For example, the owner of an expensive vehicle may not be able to keep up with payments and causes a collision to wipe out existing auto loan debt. A more criminally minded fraudsters might sell a vehicle to an illegal “chop shop” and report the vehicle as stolen to cash out on the auto insurance. Both examples are felony offenses that carry stiff fines and serious time behind bars.
To answer the question again, yes, car insurance companies often hire private investigators to help check the legitimacy of questionable accident claims. A PI is ideal when an insurance company doesn’t have the time, resources, or personnel to cover all the aspects of a given case.
H7 Investigative Services conducts private investigations in Santa Clarita, Antelope Valley, and throughout the greater Los Angeles area.
If you want to know how our agency can help with your case, click through to our consultation request page or call us at (661)454-7513.