General Indicators of Arson-for-Profit or Fire-Related Fraud

Note: While arson-for-profit is unquestionably the most vicious and costly economic assault on the property insurance industry, claims personnel should also be alert to fraud which occurs when an insured takes criminal advantage of an accidental fire.

• Building and/or contents were up for sale at the time of the loss
• Suspiciously coincidental absence of family pet at time of fire
• Insured had loss at the same site within the preceding year. The initial loss, though small, may have been a failed attempt to liquidate contents.
• Building and/or business was recently purchased
• Commercial losses include old or non-saleable inventory or illegal chemicals/materials. Insured or insured's business is experiencing financial difficulties, e.g. bankruptcy, foreclosure.
• Fire site is claimed by multiple mortgagees or chattel mortgagees

Indicators at the Fire Scene

• Building is in deteriorating condition and/or located in a deteriorating neighborhood
• Fire scene investigation suggests that property/contents were heavily over-insured
• Fire scene investigation reveals absence of remains of non-combustible items of scheduled property or items covered by floaters, e.g. coin or gun collections or jewelry
• Fire scene investigation reveals absence of remains of expensive items used to justify an increase over normal 50% contents coverage, e.g. antiques, piano, or expensive stereo/video equipment
• Fire scene investigation reveals absence of remains of items of sentimental value: e.g. family Bible, family photos, trophies
• Fire scene investigation reveals absence of remains of items normally found in a home or business. The following is a sample listing of such items, most of which will be identifiable at fire scenes except in total burns. Kitchen: major appliances, minor appliances, normal food supply in refridgerator and cabinets. Living room: television/stereo equipment, record/tape collections, organ or piano, furniture (springs will remain). Bedroom: guns, jewelry, clothing and toys. Basement/garage: tools, lawn mower, bicycles, sporting equipment, e.g. golf clubs (expecially note if putter is missing from otherwise complete set). Business/office: office equipment and furniture, normal inventory, business records (which are normally housed in metal filing cabinets and should survive most fires).

Indicators Associated With the Loss Incident

• Fire occurs at night, especially after 11 P.M.
• Commercial fire occurs on holiday, weekend or when business is closed
• Fire department reports fire cause is incendiary, suspicious, or unknown
• Fire alarm and/or sprinkler system failed to work at the time of the loss

Indicators of Burglary/Theft Fraud

• Losses include total contents of business/home including items of little or no value
• Losses are questionable, e.g. home stereo stolen out of car, fur coat stolen on trip to Hawaii
• Losses include numerous family heirlooms
• Losses include numerous appraised items and/or items of scheduled property
• Extensive commerical losses occur at site where few or no security measures are in effect
• No police report or an over-the-counter report in situations where police would normally investigate

Indicators Associated With the Claims Process

• Insured over-documents losses with a receipt for every loss and/or receipts for older items of property
• Insured's loss inventory differs significantly from police department's crime report
• Insured cannot provide receipts, cancelled checks or other proof of ownership for recently purchased items
• Insured provides numerous receipts for inexpensive items, but no receipts for items of significant value
• Insured provides receipt(s) with incorrect or no sales tax figures
• Insured provides receipt(s) with no store logo (blank receipt)
• Loss inventory indicates unusually high number of recent purchases
• Insured cannot recall place and/or date of purchase for newer items of significant value
• Insured indicates distress over prospect of an examination under oath
• Insured cannot provide bank or credit care records for recent purchases of significant value
• Insured provides receipts/invoices from same supplier that are numbered in sequence
• Insured provides receipts from same supplier with sequence numbers in reverse order of purchase date
• Insured provides two different receipts with same handwriting or typeface
• Insured provides single receipt with different handwriting or typefaces
• Insured provides credit card receipts with incorrect or no approval code