Red Flags and Their Implications for Fire Claim Investigations
The term ‘red flag’ is a well-worn phrase among claim adjusters and investigators. Merriam-Webster defines ‘red flag’ as a sign that there is a particular problem requiring attention. But, just what does that term mean in the context of a fire claim investigation?
Red flags are not evidence or proof of fraud. They are simply indicators that help the insurance company identify when further investigation is required before a coverage decision can be made. When red flags are significant or several are found together, a more thorough and complete investigation becomes necessary.
Here are just a few examples of red flags that are common to property claims:
- Loss soon after a policy has been issued, especially if there was no prior insurance.
- A request for a large increase in coverage shortly before a loss
- Deterioration of insured’s economic condition, such as foreclosure or recent job loss.
- Insured is reluctant to cooperate with the investigation of the insurance company.
- Substantial history of past claims
- A homeowner who has removed personal items such as heirlooms or picture albums from the home shortly before a fire. An owner occupied home with sparse furniture, clothing or kitchenware also raises questions.
- Properties which have been for sale or have delinquent property taxes.
Any fire claim where the cause is unknown should raise curiosity from the insurance company. Consultation should be made with an origin and cause expert and perhaps legal counsel about what level of investigation is desirable and prudent.
It may be difficult to determine a cause or even an origin if a fire causes significant damage. That does not necessarily mean that there is no need for an investigation. In fact, extensive damage can be a red flag that the fire may have been incendiary and may have involved accelerants. Interviews done by a trained professional and background checks of the property and all of the people involved become very important in such a scenario.
There is a great advantage to the adjuster and company when working relationships are already established with experienced and qualified investigators, experts and attorneys. These resources can be engaged for early analysis and provide guidance for decisions that must be made at the front end of the claim investigation. Leveraging the right experts can make all the difference between success and failure in this process.
Remember, red flags are not evidence or proof of anything. They only point to the need for a quality investigation. Don’t pre-judge the merits of the claim. Perform a thorough and fair investigation, and then make a determination based on the objective analysis of the facts.
It’s also crucial to perform the company’s investigation independent from any the local authorities may be conducting. Do not depend on any other authority, entity or insurance company to conduct your investigation. That remains the responsibility of your company.
If you are in need of well qualified fire investigators, forensic engineers or legal counsel, reach out to your peers in the industry for qualified referrals