Preventing Insurance Fraud - What is an Insurance Adjuster?

Most of us know what an insurance company is. But just what is an insurance adjuster?

Sometimes it’s not clear who adjusters are and how they’re trained for the job. (After all, how many colleges offer “insurance adjusting” as a major?)

To get some answers, we went behind the scenes with Chad Smith, a property specialist at Erie Insurance who handles large losses. Read on to learn more about him and all the important ways he helps Customers in their time of need. (And feel free to check out our short video above to learn even more!)

In your own words, what is an insurance adjuster?

To me, an insurance adjuster is someone who has a great deal of responsibility and accountability. An adjuster owes that not just to the company he or she represents, but to the customers who’ve experienced a loss.

At Erie Insurance, adjusters are the ambassadors of the company. People don’t really see how an insurance company works until they have a loss, and we represent that.

What kind of background do you need to become an adjuster?

More often than not, you need to have a college degree. I have a business degree, but insurance adjusters can pursue other fields as well. I would also recommend adding computer and math classes to your coursework.

How did you become an adjuster?

ERIE hired me as an adjuster shortly after graduating from college. I went through a few months of training that included both classroom and field training. I was tested on information and then spent some time out in the field with seasoned adjusters and appraisers to learn about what they did first hand. Because I work directly for an insurance company, I don’t need a license to be an adjuster. However, the rules vary by state.

What kind of skills do you need as an adjuster?

Being people-oriented is a must. You need to be able to empathize with the Customer by putting yourself in their shoes. Honesty and integrity are essential in establishing trust.

Because of the way the field is evolving, you need to be really comfortable with technology or be willing to learn it. To grow as a professional adjuster, you have to move beyond in-house training and pursue professional insurance designations like the Chartered Property Casualty Underwriter (CPCU) and Associate in Claims (AIC).

What’s a normal day like?

There really is no normal day. And that’s one reason why I love my job!

In order to handle it, you have to structure your days to a certain degree, but also maintain flexibility. I might plan to make calls all morning—but if I get an urgent claim, I need to reorder my day. I’m always busy.

What hours do you work?

I usually start early and end late. Sometimes I work weekends. I enjoy a lot of freedom with this position—and I’m available almost 24/7 because that’s how you provide great service. You can’t be stuck in the traditional nine-to-five, Monday through Friday mindset as an adjuster.

What’s the most memorable claim experience you’ve had?

Over the years, I’ve had many. One that stands out is working during the 2011 tornado catastrophes in North Carolina, Virginia and Tennessee. ERIE was the first insurance company on the scene. There was a lot of damage, but I was able to respond quickly and help Customers affected by the tornadoes. The fast response was made possible by the way ERIE set up its catastrophe team units. Some people I spoke to said neighbors with other carriers hadn’t even heard from their adjusters yet. It was extremely gratifying to help ERIE’s Customers when they really needed it.

What’s the most gratifying part of your job?

Knowing in my heart that I did the best I could for ERIE and for the Customer on every claim that I handle. I remember one claim we had to deny; even still, the Customer sent me a card thanking me for how polite and helpful I’d been during the process. Everyone should receive the same level of service, regardless of the outcome.

Do you have the backing of a company that offers the kind of top-notch service Chad delivers? If not, contact a local Erie Insurance Agent in your community to discuss your options and get a free quote.

Preventing Insurance Fraud - How to Get 4 Overlooked Business Risks Covered

The success of any business depends on hard work and ingenuity. Business insurance helps protect the effort and money you’ve invested in your business is covered in case a disaster strikes. But because businesses are so diverse, there are a variety of optional coverage that you should consider, too. These extras are added to your business insurance policy as endorsements.

Here’s how to help cover four common business risks with endorsements.

1. Data breaches: Any business that has personal or medical information about customers, tenants or employees is at risk for a data breach.

Don’t think it can’t happen to you? A study commissioned by Hartford Steam Boiler and conducted by the Ponemon Institute found that over half of small businesses have experienced a data breach, and many did not inform victims as required by state law. Most states have breach notification laws that not only require a business owner to inform any affected individuals (customers) of a data breach but also specify the manner and period in which the business owner must inform customers.

Two coverages you may want to consider:

• Data Breach Response Expenses: It could cover your expenses to notify affected individuals of a breach per state laws.

• Data Breach Liability Coverage: It could cover damages that you are legally obligated to pay due to fraudulent use of your customers’ non-public personal information that is lost, stolen or accidentally released. It also covers the cost to defend lawsuits seeking damages.

2. Employment liability: These days, hiring, firing and day-to-day employee management can be a risky business. You’d like to think that your employees would never dream of filing a claim or suit against you or your business for discrimination, wrongful termination, harassment or sexual harassment. Unfortunately, it does happen. Responding to claims or suits like these will require time and money.

The Equal Employment Opportunity Commission (EEOC) received 89,385 charges of workplace discrimination during fiscal year 2015, which ended in September. EEOC also secured more than $356.6 million for victims of discrimination in the private sector.

With Employment Practices Liability Coverage, you will not have to face an employment claim on your own. It can help protect you against liability damages and cover defense costs.

3. Professional liability: You’re expected to have technical knowledge or training in a particular area of expertise or perform certain services according to the standards of your profession. If you fail, you could be held responsible for any harm that you caused to another person or business. Professional liability coverage can provide you with protection for claims arising out of negligent business or professional practices.

4. Personal identity theft: As a small business owner, your personal credit may be tied closely to your business. Having your own identity stolen, could jeopardize your credit and affect your business operations.

Last year, fraudsters stole $16 billion from 12.7 million U.S. consumers, according to the 2015 Identity Fraud Study, released by Javelin Strategy & Research. That means that every 2 seconds in 2014 there was a new identity fraud victim.

Personal Identity Recovery coverage can be added to a business insurance policy1 and provide:

• Case management services to assist you in recovering a personal identity by contacting authorities, credit bureaus and businesses to correct the records.

• Reimbursement for necessary and reasonable expenses that you incur because of identity theft, including lost wages, mental health counseling and child and elder care supervision costs.

Talk to an Erie Insurance agent to learn more about the risks that you may face and how to protect your business.

Social Media Helps Solve Insurance Fraud Cases

It’s Monday morning and Jeremy McFadden, a fraud program specialist at Erie Insurance, is surfing Facebook.

Jeremy isn’t reliving memories from the weekend—he’s knee deep in investigative work that saves ERIE and its Customers many thousands of dollars every year.

“Though the vast majority of claims are legitimately submitted by honest people, there is a small portion that requires further review,” says Gene Robertson, director of Special Investigation and Analysis at ERIE. “Social media is absolutely helping us do that.”

Insurance fraud cases

Insurance fraud is a serious crime in which someone knowingly and intentionally sets out to deceive their insurance company. It is different from an innocent misrepresentation in which someone unknowingly presents false information to their insurer. (For instance, a fire destroys an appliance and someone overestimates how much it cost because he lacks a receipt.)

Circumstances surrounding suspected fraud tend to be highly unusual. “There is a big red flag when truly fraudulent activity occurs,” says Gene. Insurance fraud is a crime in every state—and in most cases, it’s a felony.

Insurance fraud cases end up costing Customers

The property and casualty insurance industry estimates that fraud costs between $30 and $60 billion a year. Insurance fraud is the second most expensive white-collar crime after tax evasion—and it costs honest Customers, who eventually foot the bill in the form of higher premiums.

Today, more people are making this connection. “Thanks to successful advertising and public awareness campaigns over the years, the way the public views insurance fraud has really changed,” says Frank Scafidi, director of public affairs at the National Insurance Crime Bureau (NICB), a not-for-profit organization that partners with insurance companies like ERIE and law enforcement agencies to fight insurance fraud.

“People used to brag about getting one over on insurance companies, but there’s now a realization that this causes your friends and family to pay more,” he says.

Piecing it all together

ERIE fights insurance fraud cases on many fronts. There’s old-fashioned detective work like visiting premises, conducting interviews and acting on tips. ERIE also uses sophisticated software and collaborates with the NICB, law enforcement and other insurers.

Fraud investigation is about seeing the whole picture, and social media posts, photos and videos are increasingly a part of that picture. This doesn’t mean all information is free game. ERIE respects Customers’ privacy rights by only looking at publicly available information. That means ERIE investigators will never create fake profiles to “friend” or “follow” a Customer with a suspicious claim.

“Our whole premise at ERIE is about doing the right thing,” says Robertson. “Protecting and respecting our Customers’ privacy is a priority in all we do, including our investigative work.”

Fortunately, such measures usually aren’t needed.

“What we find is that fraudsters often neglect to cover their tracks,” continues Robertson. “Even if their profile is private, they often post to pages of friends and groups whose accounts are public.”

A few recent insurance fraud cases

Just a few instances in which information gleaned from social media played an important role in unraveling insurance fraud cases included:

• The Playground Scam: A claim was filed for a playground that was allegedly damaged beyond repair in a storm. The playground was disposed of, leaving ERIE no way of verifying the claim. A few weeks later, the claimant was selling the same playground on Facebook.

• The Tractor Pull Scam: A claim was filed alleging an engine was damaged when someone put the wrong fuel in it. ERIE later found a YouTube clip and Facebook photos of the claimant participating in a tractor pull in the same truck. ERIE personal auto policies exclude coverage while participating in organized racing, high performance driving, stunting and similar sporting events.

• The Livery Van Scam: Several people simultaneously filed claims to an ERIE personal auto policy. ERIE later discovered a Facebook page advertising the claimant’s van as a public transportation business. ERIE personal auto policies exclude transporting people or goods for hire.

ERIE investigators have also unearthed many online photos and comments implicating claimants of committing workers’ compensation fraud. “I’ve seen claimants who are ‘too hurt to work’ post updates about their marathon training schedules or photos of themselves backpacking through the mountains,” says McFadden.

When ERIE presents someone with solid evidence of fraud, most people will withdraw or stop pursuing a claim. ERIE then turns things over to law enforcement, who will decide how to handle the crime.

You can help ERIE fight fraud

Though social media is playing an increasingly important role in combating fraud, your input still matters.

If you suspect that someone is committing insurance fraud, let ERIE know by calling the toll-free Fraud Hotline at 800-368-6696 or emailing fraud.finders@erieinsurance.com. Together, we can reduce this costly crime.

Car Tips - Dishonesty and Car Insurance Policies

If drivers have one thing in common, it is that we all want low car insurance rates. Taking advantage of the discounts car insurance companies offer and maintaining a good driving record could go a long way towards saving on car insurance.

While these are good, honest ways to lower your rates, some customers choose to hide information or lie on their car insurance applications in an attempt to get cheap car insurance.

It may be tempting stretch the truth with your car insurance provider, but it can lead to negative consequences.

How Car Insurance Rates Are Determined

It is important to understand how car insurance rates are determined in order to know how and why people would lie on their applications to get lower rates.

Your car insurance is typically determined using several rating factors that include the following:

            • Your driving record and the driving records of each additional driver you wish to add to the policy.

            • Insurance claims history.

            • Credit history.

            • Your car’s year, make, and model.

            • Primary parking location of the car.

            • Average miles driven per day.

            • Your age and gender.

            • Your marital status.

The above rating factors are examples of the most common car insurance rating factors. Some states restrict insurance companies from using certain factors to determine car insurance rates. These restrictions generally apply to credit history and gender.

Common Lies Told by Applicants

When applying for car insurance, a driver might not tell the truth regarding some of the above rating factors. When an applicant deliberately lies on his application to save money, this is considered “soft fraud.”

Car insurance agents see certain misrepresentations more often than others. Often, applicants intentionally (or unintentionally – e.g., because they forgot) give false information regarding the following:

            • The number of traffic violations or accidents on the driver’s record.

                        o Having tickets, at-fault accidents, or other violations can increase your rates. Some applicants may lower the number of violations they’ve had in order to try to obtain a better quote.

                        o NOTE: Background and driving record inquiries can easily check this information.

            • Where the driver parks.

                        o Parking your car in a garage rather than out on the street can save you money on car insurance

                        o Some applicants will lie about keeping their car in the garage, even if they don’t own a garage.

            • Miles driven.

                        o Driving less means you face fewer risks, which ultimately means cheaper car insurance rates.

                        o Applicants will often lie by giving a number significantly lower than their actual average miles driven per day.

Remember, with the Internet, checking accuracy on the facts you provide is relatively simple. Always assume your information will get verified and give accurate information.

If you can’t remember a piece of information, don’t make up facts. Try to gather all the necessary information before getting a quote.

Effects on Your Policy

Most states have laws regarding when an insurance company can or cannot cancel your policy. Lying on an application is typically considered grounds for cancellation of your policy, but typically only if the information is material, meaning the information can affect the decision about whether to insure you.

Keep in mind that most states require you to have car insurance if you are driving your car on public roads. A cancellation of your policy would cause a lapse of car insurance coverage and you could be in violation of law if you operate your car while it is uninsured.

Dishonesty and Car Insurance Claims

As stated earlier, it isn’t always easy for car insurance companies to know if you are being truthful on your application. They cannot check every detail, such as where you park your car overnight. However, this can change if you need to make a claim on your insurance.

If, for example, you have comprehensive car insurance and you need to make a claim because your car was damaged in a hailstorm, you may find that your insurance company will investigate this claim.

If they find that you park your car out on the street when you stated in your application that you park it in a garage, they can deny that claim. You will responsible for paying all the repair costs.

If your car insurance company finds out you gave false information in your application, and they do not cancel your policy, you might experience a hefty rate increase.

Honesty Really Is the Best Policy

Lying to get a better rate can be tempting, but it does come with consequences you don’t want to face. Car insurance companies also pass any costs they face due to lies on to other customers. So in an attempt to get discounted rates, you actually contribute to the increased rates for everyone.

Taking advantage of car insurance discounts and driving safely is a much better way of saving on your policy.

Car Tips - How to Handle Staged Car Accidents

To the average person, a car accident is one of the least desirable situations in which they could find themselves. An auto accident can be dangerous, traumatic, and expensive.

Unfortunately, some people do cause accidents on purpose. In fact, staged car accidents are becoming more common in the United States. Perpetrators of fraudulent accidents intend to make money by submitting bogus claims.

Types of Accident Scams

Staged car accidents are typically carefully planned and practiced. Described below are some common schemes.

The T-Bone Accident

In this scenario, a scam artist will wait for your car to proceed through an intersection and then jam the gas pedal and T-bone your vehicle. When the police arrive, phony witnesses, also known as “shady helpers,” will then claim you were the one who ran the stop sign or traffic signal.

The Wave

In this scam, the other driver will notice your attempt to switch lanes and subsequently wave you ahead. As you attempt to maneuver into the lane, he will accelerate, causing a collision with your car. When the police arrive, he will deny ever providing a courtesy wave, placing you at fault.

Dual Turn Sideswipe

A driver in the outer lane of the dual turn rams into you if you go even the slightest bit out of the inner lane as the two of you are making your turns. They may also drive a bit into your lane and swipe your car and then blame you.

“Witnesses” working with the con artist may corroborate his story.

Brake Slam

This simple scam involves the driver in front of you slamming on their brakes for no reason so that you cannot avoid rear-ending her vehicle.

Swoop and Stop

In this scenario, a car will suddenly pull in front of yours and stop. Another vehicle will simultaneously pull up alongside your car, preventing you from swerving to avoid an accident.

Phony Injuries

In any fraudulent accident, you may find yourself on the hook for injuries you didn’t cause. The con artists and their passengers may collaborate with a shady physician or chiropractor and file personal injury claims for phony injuries.

Some may even visit legitimate doctors and claim whiplash or other "soft tissue injuries," which are difficult to detect.

Towing Scams

Once you’ve been in an accident, you may need a tow. Don’t let your guard down at this point, even though the accident is over. You are still susceptible to towing scams.

Be especially careful of tow trucks that appear before you have a chance to call for assistance.

Someone who appears on the scene and offers to help before you ask for help may be attempting to scam you by offering a tow at very inflated rates.

To learn more, visit our page on preventing car insurance fraud.

Negative Consequences of Scams

Car insurance scams can have consequences ranging from inconvenient to devastating. They can have the following effects.

            • Expense. You may be stuck paying for damages you didn’t cause.

            • Inconvenience. Even if you are unhurt and your insurance company ultimately pays for the damage, the process can be long as you get your car fixed and file the claim and police report. If you add a lawsuit to the mix, you’re looking at even more time until resolution.

            • Higher auto insurance premiums. Car insurance companies pay more when fraud occurs, and those costs are balanced out by increased premiums for everyone.

            • Trauma. Getting in your car after being a victim of a staged car accident can be scary because you may feel that you cannot avoid an accident no matter how careful you are.

            • Injury and death. Scammers don’t necessarily intend to hurt or kill anyone, but staged car accidents can go terribly wrong.

How to Avoid Accident Scams

The best ways to avoid accident scams are to drive carefully and be prepared. Keep a camera, pen, and paper in the car so that you can take photos and notes at the scene.

Also, be aware that some groups are at higher risk for being victims. Risk factors include the following:

            • Luxury vehicles and new cars – They may have higher insurance limits.

            • Work vehicles and big rigs – Car insurance scams on these vehicles may be more lucrative.

            • Women and older adults – Con artists may find these drivers easier to intimidate.

Handling a Fraudulent Accident

Staged car accident scam artists are vulnerable to facts. The more information you provide, the more equipped you are to fight an insurance scam.

Snap photos from every angle of the involved vehicles, with special focus on the damage. Also, capture on camera the license plate, as well as photos of the driver all the passengers in the other vehicle.

Take copious notes, and record as much as you can of the following:

            • Driver license number.

            • Vehicle registration information.

            • Car insurance information.

            • Name, address, and phone number.

            • The general height and weight (as well as the ethnicity) of the other car's driver and passengers.

Also, call the police if you suspect that you were in a staged accident.

Don’t ever settle on site with cash; always report the accident to your car insurance company, and let them know if you suspect a scam.