CALA Risk Management & Fraud Prevention in Claims Handling 2 — Questions and Answers
Question 1: Which red flag most strongly suggests a staged collision between two cooperating drivers?
- Both drivers use the same body shop
- The at-fault driver immediately admits liability
- Both vehicles show damage inconsistent with the described impact angle (Correct answer)
- The claimant has prior claims with the same insurer
Correct answer: Both vehicles show damage inconsistent with the described impact angle
Damage inconsistent with the reported impact angle is a primary physical indicator of a staged collision.
Question 2: A claimant submits repair invoices totaling $8,400 but the adjuster's appraisal is $3,200. What is this discrepancy most likely called?
- Supplemental claim
- Inflated repair fraud (Correct answer)
- Betterment dispute
- Comparative negligence offset
Correct answer: Inflated repair fraud
When repair invoices significantly exceed a fair appraisal without justification, it is classified as inflated repair fraud.
Question 3: What does the term 'sliding' mean in the context of insurance fraud?
- Delaying settlement to reduce payout
- Adding unauthorized coverages to a policy without the insured's knowledge (Correct answer)
- Shifting liability to a third party
- Reducing stated deductibles after a loss
Correct answer: Adding unauthorized coverages to a policy without the insured's knowledge
Sliding is an agent-level fraud where coverages are added to a policy without the policyholder's knowledge or consent.
Question 4: Under the ISO ClaimSearch database, what is the primary purpose of cross-referencing a claimant's prior claims history?
- To determine subrogation potential
- To identify patterns of suspicious or repeated claims (Correct answer)
- To verify the claimant's current coverage limits
- To calculate accurate diminished value
Correct answer: To identify patterns of suspicious or repeated claims
ISO ClaimSearch is used to identify claimants with patterns of repeated or suspicious prior claims across multiple insurers.
Question 5: An adjuster notices a vehicle was reported stolen two days after the insured defaulted on auto loan payments. Which fraud category does this most likely represent?
- Opportunistic fraud
- Hard fraud (owner give-up) (Correct answer)
- Soft fraud (premium evasion)
- Third-party liability fraud
Correct answer: Hard fraud (owner give-up)
A vehicle reported stolen shortly after financial distress is a classic 'owner give-up,' a premeditated hard fraud scheme.
Question 6: Which method is MOST effective for detecting phantom passenger fraud in an auto accident claim?
- Reviewing the vehicle's service history
- Obtaining recorded statements from each alleged occupant separately (Correct answer)
- Inspecting airbag deployment data
- Requesting the insured's credit report
Correct answer: Obtaining recorded statements from each alleged occupant separately
Separate recorded statements from alleged occupants often reveal inconsistencies that expose phantom passenger schemes.
Question 7: A body shop bills for OEM parts but installs aftermarket parts and keeps the price difference. This scheme is known as:
- Parts substitution fraud (Correct answer)
- Betterment padding
- Short-pay fraud
- Labor rate churning
Correct answer: Parts substitution fraud
Parts substitution fraud occurs when a shop bills for more expensive OEM parts but installs cheaper aftermarket equivalents.
CALA Risk Management & Fraud Prevention in Claims Handling 2
Which red flag most strongly suggests a staged collision between two cooperating drivers?