What is Catastrophe Fraud?

A car submerged in water near a stop sign.

Catastrophe fraud occurs when there has been a natural or man-made disaster. Those that are insured need help quickly, and insurance companies respond fast to all claims to ensure the safety and wellness of the people they cover. Catastrophe fraud comes in several forms, but essentially it means that people are taking advantage of insurance companies when a natural or man-made disaster occurs.

Six Forms of Catastrophe Fraud

There are five main ways people who have not been affected by the catastrophe can take advantage of companies and commit catastrophe fraud.

  1. Asking for charitable contributions from individuals or agencies because of the disaster.
  2. Raising the price of services because demand from the catastrophe is so high.
  3. Pretending to be a contractor or vendor and collecting money with no plans to repair any damage.
  4. Filing an illegitimate claim with the insurance company for repairs.
  5. Forging documents, stealing insurance claim checks or otherwise benefiting financially from a catastrophe through falsifying documents.
  6. Licensed contractors acting as private adjusters without having a valid adjusters license.

Insurance Related Catastrophe Fraud Has Clear Warning Signs

When an insured party files a claim because of a catastrophe, the insurance company would like to believe that the person is telling the truth. Fraud occurs when the individual claims to have lost property that doesn’t exist, when damages claimed are not due to the recent catastrophe or when damages are caused on purpose. There are signs that the insurance company should look for when fraud is suspected. These signs include:

  • Lack of proof (receipts or photographs) for valuable items claimed as lost or damaged.
  • Big losses at a commercial site where there is limited or no security.
  • Declared lost items can’t actually fit in the space that they were reportedly in at the time of the damage.
  • The items claimed do not match the lifestyle, job or salary level of the person making the claim.

Catastrophe fraud happens at a time when insurance companies are flooded with claims. This is when mistakes will happen. It is important to work with a third party SIU team that can help establish which claims are real, and which claims appear fraudulent. Insurance companies lose a large amount of money each year paying fraudulent claims because of a lack of resources to help combat criminals looking to make money off a false claim.

The Brumell Group is a Jacksonville, Florida-based investigations firm with over 25 years of experience in investigating fraud. When insurance claims start piling in, The Brumell Group is ready to help.