When you start your business, it’s likely that you will be involved in personal injury litigation at some time. When accidents occur, it may be hard to tell which ones are real and which ones are the fraudulent ones. It is especially tricky if the only evidence you have is an employee or a customer’s account of what occurred.
Insurance fraud can be placed into two categories: hard fraud and soft fraud. Hard fraud is when someone fakes an injury, accident, arson, theft or other loss to gain money. These claims are usually made by employees or customers.
Fraudulent insurance claims have increased dramatically over the past 10 years. Below is a list of the two main categories which are general liability and workers compensation.
General Liability Fraud
General Liability Fraud is one of the widest forms of insurance and includes things such as premises liability, completed operations and products liability. Damage includes property damage, bodily injury, advertising injury, and personal injury.
The best way to protect your business from a fraudulent claim is to keep well organized, consistent and thorough records. Another good idea is to check your business premises for hazards and record it. This will help you prove that a hazard wasn’t there at a certain time. General liability fraud is harder to execute than workers’ compensation fraud.
Workers’ Compensation Fraud
Workers’ compensation insurance is there to protect employees who are injured whilst at work. This benefit pays for things like lost wages, medical expenses and any other costs a worker may incur whilst they are recovering.
The majority of employees are trustworthy, but some employees put in fraudulent claims and cause vast damage to a business. Getting Insurance for business is essential, but it’s a worthwhile cost because you pay a small amount of money in the way of an insurance premium which then protects you from having to pay a greater amount if an accident/fraudulent claim is put in. Billions of dollars in false claims are stolen each year!
Some examples of workers’ compensation fraud include:
- Concealing information to get benefits
- Providing false information to claim benefits
- Lying about how an injury happened
- Pretending an injury has been caused when it hasn’t
- Inflating the costs incurred
Some things you should be suspicious of include:
- An employee reports an injury that happened a week or so ago.
- An employee is on their last warning at your business.
- The claimant refuses to see a doctor or stops communicating with you.
So how do you protect your business? You need to make sure you document and report the following:
- You need a statement from the claimant.
- Get any witness statements in writing.
- Capture any queries in writing.
- Pass on the information immediately
- Let the carrier know of any issues, e.g. the employee being on their final warning.
If you suspect fraudulent activity, then you should report your concerns to:
- The National Insurance Crime Bureau
- The Coalition Against Insurance Fraud
- The National Association of Insurance Commissioners
- Your broker who will talk you through what to do next.
It is getting more difficult to protect your business from fraudulent claims, but there are certain things you can do that can help. Including keeping clear, well-organized records, getting witness statements as soon as an incident occurs and by fitting CCTV into your business which will capture a video of an accident and how it occurred.