How Often do Insurance Companies use Private Investigators?

What’s The Role of a Private Investigator for Insurance Companies?

Insurance fraud is common in the U.S. Every year, $40 billion is lost through insurance fraud. Both the policyholder and the insurance company can commit this fraud. But most of the time, it’s the policyholders who commit it. That’s where insurance private investigators come in.

A policyholder may try to outsmart an insurance company by making false or exaggerated claims. If the insurance company pays all false claims, it would incur considerable losses and risk going out of business. Sometimes the only way to differentiate a legitimate claim from a false one is to engage with a private investigator.

So, how often does this happen, and what role do these detectives play?

When Do Insurance Companies Need a Private Investigator?

When you file a claim with an insurance company, especially for a high amount, the company may need a private detective. That’s not to say all claims warrant an investigation. Primarily, this depends on the type of insurance and whether the company has reasons to doubt your claims.

Most detective work occurs in the following cases:

1. Worker Compensation Fraud

Workers’ compensation covers personal injury arising in your working area. Sometimes an employee may exaggerate an injury to get more benefits. Other times, an injury may happen outside the workplace, but the worker makes it look like it occurred in the workplace. Or it could be a complete lie where no accident ever occurred.

Often, a medical report alongside some credible witnesses helps to verify the claim. But if this evidence is missing or conflicting, that’s an early indication of fraud.

2. Staging Accidents

Staging an accident is a fraud that can arise in commercial auto insurance. In this case, a person gets into an accident deliberately. The perpetrators maneuver the traffic and use proper timing or confuse the other driver leading to an accident.

These criminals may be working in two cars. One car gets in the way of the victim’s vehicle, who then applies emergency brakes. The rear vehicle crashes into the victim’s car from behind. Then, they make it look like it’s the other person’s fault.

And since these criminals work in groups, they can have a lot of fake evidence to support such incidents. The damage may be minor, but they can overstate the figures when filing insurance claims.

3. Self-Damage

Insurance companies provide liability coverage for errors and omissions that a business owner may cause to the client. Some clients may cause the damage themselves, then attribute it to the business or contractor.

Self-damage also applies when a person damages their car or a house deliberately. Then claim that the damage was from an accident or a natural disaster.

Purpose of Insurance Private Investigator

Insurance companies do not need to investigate all cases, especially if an injury or the loss suffered is self-evident. But sometimes, if physical evidence is lacking or insufficient, the claims may become questionable. For this reason, the company may opt to hire a private detective to conduct background checks.

Private detectives would want to know whether what you said is true. Let’s say you claim to have a back injury that prevents you from lifting heavy objects.

It’s the detective’s work to ascertain whether that statement is true. So, if they see you lifting heavy objects, this would contradict the information you previously gave.

The purpose of the insurance private investigator is purely to find information. It’s not an invasion of privacy. After all, private investigators use publicly available information. To get this information, the investigator can check your social media profiles, follow you in public, search your public records, and talk to people who know you.

You might feel uncomfortable about the investigation, but there’s nothing illegal about it. Moreover, it doesn’t cause you any harm. Besides that, private investigators have legal guidelines and ethics that they must follow.

They only used the allowed methods when conducting the investigation. So, do not worry about a home invasion, trespassing, or hacking incidents in an attempt to obtain any digital information.

Do You Need an Insurance Private Investigator?

False claims by policyholders can lead to losses for insurance companies. Insurance companies prefer to hire private investigators to help identify fraudulent claims. These investigations are frequent since they’re part of due diligence measures.

Are you thinking of hiring a private investigator to protect your business from false insurance claims? Ken Stevens is a private detective in Tampa. Give him a call today for a free consultation.