Investigators Sound Alarm on Fraudulent Water Damage Claims

Insurance fraud involving water damage claims is on the rise, according to Lin Werkheiser, director of special investigations at Command Investigations. During a webinar with the Coalition Against Insurance Fraud, Werkheiser shared several suspicious claims, such as a toilet clog supposedly caused by cat waste and another involving a child flushing an item before a vacation.

Many of these fraudulent claims appear linked to real estate investors and home flippers seeking insurance money for renovations. Red flags, like inconsistent moisture levels, staged damage, and AI-generated documents, are common. Investigators are encouraged to scrutinize claims closely, especially Category 3 claims involving sewage water, as these tend to carry higher payouts.

Werkheiser also stressed the importance of verifying all documentation and checking for potential connections between claimants and contractors.