Fraudulent Property Insurance Claims: Identification, Investigation, Denial and Defence at Trial

Authors: Neo Tuytel and Krista Prockiw

Published: June, 1995

Fraudulent property insurance claims have been the subject not only of many cases before the Canadian courts, but also the learned commentary of various professionals in the insurance and legal fields. The purpose of this paper is to provide some guidelines for adjusters and claims examiners with respect to the identification, investigation, denial, and defence of fraudulent property insurance claims. This will be done by outlining the relevant statutory and case law, as well as indicating some of the practical steps which may be taken to identify and defend against such claims. Some of these steps will be of interest to underwriters.

The focus of the paper will be on fraudulent proofs of loss, with only limited observations regarding cases of arson or other intentional acts by insureds. We will touch briefly on the issues of material change in the risk, “bad faith” and misrepresentations in the policy application.

The key topics covered are:

• how to identify a fraudulent property insurance claim;
• how to properly investigate fraudulent proofs of loss and arson;
• how to deny such claims; and
• how to successfully defend at trial actions brought by fraudulent insureds.

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