State Farm Encourages Clicking to Cut Fraud

After the crash, click.

State Farm Insurance Co. this month began distributing 77,000 disposable cameras to Long Island customers as part of a new program to cut into fraud. The insurer asks customers to keep the cameras in their cars until needed to document damages in an accident.

If successful, the program could expand across the country.

“Fraud in New York state is a $1-billion business,” State Farm spokeswoman Karyn Garsky said. She estimated the cost of the cameras to be at least $100,000 -- a small investment, Garsky said, compared with the losses from fraudulent claims.

State Farm is believed to be the first insurance company to offer cameras to its auto insurance customers, said P.J. Crowley, a vice president of the industry-backed Insurance Information Institute.

“If a couple of dollars spent on a camera prevents a multi-thousand-dollar claim from going through, then obviously it’s paid off,” Crowley said. “This is definitely a low-tech solution, but the kind of thing that can pay off just by preventing a small number of fraud accidents from turning into thousands of dollars in payouts.”

State Farm figures a policyholder using the camera to document damage at a crash scene will prevent the other driver from making subsequent claims for damages resulting from other circumstances. The back of the camera has space to write down pertinent information about the crash.

The voluntary program is beginning in Long Island’s Nassau County because agents there came up with the idea. The 15-exposure cameras were mailed to customers this month. If the cameras are used, customers bring them to their agents for developing.

Hofstra University law professor Roy Simon, a State Farm customer who received a camera, applauded the goal of cutting down on fraud, although he admitted to some skepticism.

“If you make a claim that State Farm won’t pay and you go to a lawyer to fight them, State Farm doesn’t say they’ll send you copies of the photos. Are they getting double prints when they take them for developing?” Simon said.

“It’s putting all the evidence in the hands of State Farm, which may or may not be to the advantage of the policyholder. In a way, it keeps a leash on policyholders.”

Garsky said extra prints can be made for a policyholder who requests them, although she conceded that legally, the photographs would remain the property of the insurance company.

Garsky also offered a caveat for those keeping the cameras in their cars.

“If it’s excessively hot, the film could be damaged,” she said. “We want people to be conscious of that and maybe remove the camera and put it in a purse or a bag” on hot days.