Insurance fraud costs the industry over $40 billion a year. As an adjuster, you’re the first line of defense — and the first person who gets questioned if something goes wrong. Here’s what you need to know before you get to the field.
Dave’s Five Questions
Before you make any decision on a claim, Dave runs every situation through the same five questions.
- Is it legal?
- Is it ethical?
- Is it fair to the insured?
- Is it fair to the carrier?
- The big one — how would this look if it became public? If you’re on the Channel 5 evening news and the investigative reporter is looking at how you handled this claim, does it seem right?
If the answer to any of these is no
Stop. Get help. Call your field manager. Don’t make the call alone.
Fraud You’ll Actually See
Most fraud isn’t sophisticated. It’s clumsy, obvious to trained eyes, and committed by people who don’t realize adjusters know what to look for.
Roof Damage
The Ball-Peen Hammer
Someone goes up on a roof and hits shingles with a hammer to manufacture hail damage. Hammer impacts pulverize granules into dust; real hailstones crush differently, and real hail damage is random, not uniform and patterned. If soft metals — gutters, vents, downspouts — show zero damage while shingles are destroyed, that’s a flag.
Total Loss Manufactured
The Tarp Scam
Dave walked up to a property where two-thirds of the roof was covered with a tarp, nailed every two feet through the entire field. When the tarp came off, three damaged shingles sat underneath — the roofer had methodically destroyed everything he’d covered. He’d previously been a public adjuster. He knew exactly what he was doing.
Repeat Claim
The Filed Serial Numbers
Dave inspected mechanicals after a flood and found an air conditioner already paid for in a prior claim. The homeowner had collected the money, filed the serial numbers off the old unit, had it repaired, and kept using it. There was no proof of purchase for a new one.
Pre-Inspection Damage
Roofers Pulling Shingles
They know how adjusters count damage in test squares. They go up before you arrive and pull shingles to push the count above the replacement threshold — often without the homeowner knowing it happened.
The Rule: Document Everything, Accuse Nobody
If you see fraud indicators, you document what you found — not who you think did it. Put it in the file: “Mechanical damage consistent with a ball-peen hammer observed on north slope. Soft metals show no corresponding impact damage.” Let the carrier’s SIU (Special Investigations Unit) decide whether to pursue it.
What you don’t do
“Homeowner went up on the roof and hit it with a ball-peen hammer.” You don’t know that. You can’t prove it. And if that note shows up in court, you’re the one in trouble.
Cover the legitimate damage. Report the indicators. Keep your notes factual and professional. Every entry in a claim file is discoverable in court. Write like a judge is reading it.
The Gray Areas
Not everything is black and white. Dave repeats this in every ethics recording.
Field Note — D. Kaltenbach Coverage Denial
“We don’t live in a black-and-white world.” The homeowner who’s been paying her policy for 15 years and has never filed a claim — and now the one claim she files isn’t covered, because the water came from the hill in her front yard, which makes it groundwater, which makes it flood, which her homeowner’s policy doesn’t cover.
You can be honest and compassionate at the same time. Explain what the policy covers. Explain why this doesn’t qualify. Look for anything else on the property you can legitimately cover. Treat her with respect. But don’t cover something that isn’t covered just because you feel bad.
The adjusters who get in trouble aren’t the ones who make a wrong call. They’re the ones who selectively choose photos, skip evidence that doesn’t support coverage, or misrepresent facts because they don’t want the confrontation.
Subrogation
Sometimes the damage is covered but caused by a third party’s negligence — a roofer who nailed shingles incorrectly, a plumber whose work failed, a contractor who cut corners. That’s subrogation: the carrier pays the claim, then goes after the responsible party to recover costs.
Your job: recognize it, document it (who did the work, when, photos of the defect), and notify the carrier. You don’t decide whether to pursue it. You just flag it.
Protect Yourself
Take assignments within your expertise. If you don’t know commercial roofs, don’t pretend you do just to get the claim. Ask for help or pass it to someone qualified.
Admit mistakes immediately. Dave tells the story of explaining replacement cost coverage to a homeowner, then realizing they had an ACV (actual cash value) policy instead — and having to call back and correct it. The most uncomfortable call he’s ever made. But it was the right one, and he now triple-checks every policy before communicating with the insured.
Don’t make promises you can’t keep. Don’t quote dollar amounts at the property. Don’t tell the homeowner “you’re getting a new roof” when you haven’t written the estimate yet.