Fraud Detection and Prevention in Auto Claims Flashcards

Which of the following describes 'paper accidents' in auto insurance fraud?

Answer: Fictitious accidents that never physically occurred

Paper accidents are entirely fabricated incidents submitted as insurance claims for accidents that never actually happened.

When investigating potential fraud, an adjuster should obtain a recorded statement primarily to:

Answer: Lock in the claimant's version of events for comparison against evidence

A recorded statement preserves the claimant's account so it can be compared against physical evidence, witness statements, and prior claim history for inconsistencies.

Which of the following body shop practices is a red flag for repair fraud?

Answer: Billing for parts that are listed as 'replaced' but were actually repaired

Billing for replaced parts when those parts were actually repaired is a form of fraudulent billing that inflates the claim cost.

Under the anti-fraud provisions of most U.S. state insurance codes, insurers are generally required to:

Answer: Maintain a Special Investigations Unit and report suspected fraud to the state

Many states require insurers to establish SIUs and report suspected fraudulent claims to the state insurance fraud bureau.

What is the primary purpose of an Examination Under Oath (EUO) in an auto insurance fraud investigation?

Answer: To compel the insured to provide sworn testimony about the claim under oath

An EUO is a formal proceeding where the insured is required under the policy to give sworn testimony, and false statements constitute fraud.

A claimant submits a claim for a vehicle fire. Which of the following findings would most strongly suggest arson fraud?

Answer: The vehicle had recent mechanical problems and the owner was behind on payments

Financial distress combined with a convenient fire is a classic indicator of owner-caused arson fraud, often called an 'owner give-up.'