The manager of a Road America convenience store in Lebanon, Indiana, knew enough to keep his eye on a customer who was wandering aimlessly around the back of the store one February morning. As the manager watched on the store's security mirrors, the customer sat down, slapped his hand against a display case and began screaming in pain. Alarmed, the manager called an ambulance and the police. The man was treated for minor injuries and released.
Two months later, Road America's carrier, Indiana Farmer's Insurance Agency, received a bill for $60,000 from a hospital in Nigeria, claiming the customer had been treated there for extensive injuries. The customer demanded payment through numerous phone calls, even after the company denied the claim.
The Indiana Insurance Fraud Task Force uncovered a pattern of suspicious claims by the customer. When he was arrested in Cincinnati, he was carrying a computer disk full of fake letters and bills he would print at local copy shops and fax to insurers.
According to the National Insurance Crime Bureau (NICB), 10 percent of all property/casualty insurance claims are fraudulent. In one popular scam, the hustler stages an accident at a business in hopes of collecting insurance. It's not a victimless crime; every accident claim filed on your business raises your premium. Fortunately, the same steps you'd take to eliminate real accidents can also help prevent bogus ones.