Insurance fraud is a costly and prevalent issue during the course of an insurance claim that occurs, which in turn has led insurance companies to adopt various measures to mitigate risk of fraud and ensure claims are legitimate. One of the more controversial tools at their disposal is a private investigator (PI). While many people are surprised to learn that their insurer might be watching them, it is a fairly common practice, particularly in cases involving large payouts, long-term disability claims, or suspicious circumstances. But how often do insurance companies really use private investigators, and under what circumstances? This blog will delve into the nuances and complexities of this topic to give the reader a better understanding on the role private investigators play in an insurance claim.

The Evolution of Insurance Surveillance in Canada

Surveillance has long been used to detect insurance fraud, but its methods have advanced considerably over time. In the 1990s and early 2000s, investigators mainly relied on physical tracking and video recordings. Today, digital tools such as GPS tracking (where permitted), drone surveillance, facial recognition, and online data scraping are commonly used to monitor claimants. The growing sophistication of these technologies has expanded the reach—and raised the intrusiveness—of surveillance, prompting ongoing concerns from privacy advocates and legal professionals.

Why Do Insurance Companies Use Private Investigators?

The principal reason insurance companies use private investigators is to detect and prevent fraud against their company. Insurance fraud in Canada is a multi-billion dollar problem, with the Insurance Bureau of Canada estimating it costs honest policyholders an additional $1.6 billion in premiums annually. When companies suspect fraudulent activity, they may resort to surveillance to gather evidence that either supports or disproves the claim, so that they don’t have to pay.

Some common fraud indicators that may trigger an investigation include:

  • Exaggerated or false injuries: Claimants reporting more severe disabilities than actually experienced.
  • Staged accidents: Orchestrating accidents or damages to make illegitimate claims.
  • Unreported income: Individuals receiving disability payments while working under the table.
  • Multiple or frequent claims: A history of several suspicious or exaggerated claims can raise red flags.

Private investigators help either by validating a legitimate claim or by preventing payout on fraudulent or exaggerated submissions, which in turn helps keep lower premiums for all policyholders.

The Prevalence of Private Investigator Use

Although specific statistics on the frequency of PI use by insurance companies are not publicly available, some evidence and legal expert commentary suggest it is more common than most people realize. In particular, private investigators are frequently seen used in long-term disability (LTD) insurance cases, where the cost of monthly benefits over several years can total hundreds of thousands of dollars. Given the potential for a large payout, it surely makes financial sense for insurance companies to invest in hiring a private investigator in hopes of avoiding long-term costs.

Auto insurance, liability insurance, and workers’ compensation are other areas where investigators are regularly seen utilised. The use of PIs increases when the financial stakes are elevated, the claim involves subjective injuries (like chronic pain), or when inconsistencies are found in a claimant’s documentation or behavior.

What Insurance Companies Say About Surveillance

Insurance companies frequently justify the use of private investigators as a critical tool that is essential to safeguarding their operations and also prevent losses that could impact honest policyholders. Canadian insurers stress that surveillance is used selectively and only when there is a credible suspicion of misrepresentation, not everyone who makes an insurance claim will have surveillance watching them.

Furthermore, the insurance companies maintain that all investigative practices adhere to applicable privacy laws. Without such measures, they argue, fraudulent claims could deplete resources and ultimately lead to higher premiums for everyone. Some insurers have even started including warnings in policy documents, which work to subtly alert claimants that surveillance may be initiated if discrepancies are detected in their claim.

How Investigations Are Initiated Internally

The decision to bring in a private investigator typically commences with the claims adjuster. If warning signs arise while reviewing a case—such as discrepancies in medical records, inconsistent statements, or behaviour that doesn’t match the reported injuries—the adjuster may refer the case to the insurer’s Special Investigations Unit (SIU). This unit focuses on detecting potential fraud and collaborates with external investigators to observe and investigate claimants. Every step is carefully and meticulously documented to ensure that actions like hiring a PI are legally sound and follow internal procedures.

Often, insurers also rely on predictive analytics software to detect claim patterns that may indicate fraud. When a claim is flagged, it may undergo a more detailed review, which can result in full-scale surveillance.

Common Methods Used by Private Investigators

Private investigators use a wide range of methods to conduct their surveillance:

  • Video Surveillance: Recording claimants in public settings engaging in activities that directly conflict with their reported restrictions (e.g., running after claiming a knee injury).
  • Social Media Monitoring: Private investigators frequently review platforms like Facebook, Instagram, and LinkedIn to identify potential discrepancies in someone’s claim.
  • Background Checks: These may include looking into past claims, employment history, or  legal issues.
  • Interviews and Canvassing: Private investigators may interview neighbors, coworkers, or acquaintances to gather insight into the claimant’s daily activities and identify any inconsistencies with the reported information or existing evidence.
  • Field Surveillance: This is when the claimant is followed discreetly to observe their routines over several days.

The collected information is assembled into a report. It often features time-stamped photos or video, which may be shared with insurance adjusters, legal counsel, or presented as evidence in court.

What Happens After a PI Submits Their Report?

Once the findings from the private investigator are submitted, the insurance company then reviews the evidence to determine next steps. 

If the surveillance contradicts the claimant’s account or medical reports, the insurer may:

  • Deny benefits;
  • Terminate benefits; or
  • Offer a reduced settlement to the claimant.

Claimants are generally advised of the insurer’s findings and may have an opportunity to challenge them through an appeal process. This is often a critical point where legal support becomes important, especially if the claimant believes the surveillance presents a misleading picture of their personal limitations. While surveillance footage and other forms of evidence captured from PI can influence a case, it is not definitive; courts assess it alongside medical assessments and the claimant’s account to reach a fair conclusion. Strong legal representation is key to challenging evidence that inaccurately reflects the claimant’s true condition.

Legal Boundaries in Canada

In Canada, private investigators are bound by strict federal and provincial privacy laws. While they are permitted to record individuals in public spaces, where there is no reasonable expectation of privacy, they are prohibited from trespassing on private property, placing hidden cameras inside homes, or intercepting phone communications.

The collection and use of personal data is further governed by the Personal Information Protection and Electronic Documents Act (PIPEDA), which requires that any surveillance be justifiable, limited in scope, and directly tied to the suspicion being investigated.

Courts may admit surveillance evidence if it was lawfully obtained. However, if a PI crosses legal boundaries, the evidence may be ruled inadmissible, and the insurer could face legal consequences for the breach.

Psychological and Emotional Impact on Claimants

Knowing or suspecting that one is under surveillance has the ability of taking a serious emotional toll on a claimant. Many experience heightened anxiety, distrust, or even depression upon discovering they’ve been monitored. This often damages the relationship between the insurer and the insured and may add complexity to any ongoing legal matters, which does not benefit anyone.

In certain situations, surveillance is used as leverage to push claimants toward accepting reduced settlements. Legal professionals recommend that individuals remain honest in their daily activities and keep thorough records of their medical care and physical limitations to protect their credibility. If your claim is truthful, surveillance will not be able to affect your claim in a negative way.

Signs You Might Be Under Surveillance

There are several signs that may suggest you are being watched or surveilled:

  • Seeing the same vehicle parked near your home or following you around over several days at a time;
  • Unfamiliar individuals near your workplace or frequently visited locations; or
  • Increased activity on your public social media posts from unknown profiles.

Although these indicators are not conclusive or exhaustive, they should be taken seriously. If you suspect you are being surveilled, you should consult with your lawyer and avoid any behavior that could be misconstrued during your claim.

How to Protect Yourself

If you’re involved in an insurance claim, the best defense against surveillance is both honesty and consistency. Here are a few key tips:

  • Be honest when reporting symptoms and limitations.
  • Follow your doctor’s recommendations and keep detailed records of anything relevant.
  • Minimize the use of social media platforms.
  • Maintain a daily journal which tracks your symptoms, treatments, and physical restrictions.
  • Most importantly, seek guidance from a lawyer experienced in insurance claims—they are best suited to protect your rights, guide you through the process, and address any surveillance concerns effectively.

Ethical and Social Debates

The use of surveillance in insurance claims sparks ongoing ethical debate amongst individuals. Critics contend that it can be intrusive and unfairly impact those with invisible disabilities, while people in favour argue it’s a vital measure to detect fraud and safeguard the interests of honest policyholders.

Public sentiment remains split. Although insurance fraud is widely condemned amongst society, individuals also do not want to face the ramifications of people not making truthful claims. Ensuring transparency, oversight, and legal accountability is essential to preserving public confidence.

Future Trends: AI and Predictive Analytics in Surveillance

The future of insurance surveillance is set to become increasingly data-driven compared to the current times. Insurers are incorporating artificial intelligence and predictive analytics into their fraud detection systems, allowing them to flag potentially suspicious claims by identifying patterns across large datasets. AI can quickly detect red flags like repeated claims or inconsistencies between medical records and online behavior. 

While this technology may reduce reliance on traditional surveillance methods, it introduces new ethical concerns around accuracy, bias, and accountability. As these tools become more widespread, regulators will likely be called upon to modernize privacy and transparency frameworks to address emerging risks. There will be a need for more legal reform with the introduction of these new tools to safeguard individuals rights. 

Claimant Rights and How to Respond to Surveillance Findings

While insurers have the right to investigate suspicious claims, claimants also have important rights and possible remedy options when they believe surveillance has been used improperly or unfairly. 

Understanding these rights is essential for protecting oneself throughout the claims process:

  • Right to Access Evidence: Claimants typically are entitled to request and review the surveillance evidence that was gathered about them. This can be useful in identifying misinterpretations or challenging misleading footage.
  • Filing a Complaint: If a claimant believes the investigation crossed legal or ethical lines they may file a complaint.
  • Legal Remedies: Courts may exclude improperly obtained surveillance evidence, as it would go against fundamental justice.
  • How Lawyers Can Help: A skilled lawyer can assess whether surveillance evidence is admissible, negotiate with insurers to prevent unfair claim denials, and advocate for claimants whose privacy or dignity was violated.

Conclusion

Private investigators play a key role in contemporary insurance fraud prevention. Surveillance is commonly employed, particularly in high-value or suspicious claims. Gaining insight into the reasons behind surveillance, the techniques used, and the legal boundaries governing PIs can help claimants safeguard their rights. At its core, the use of surveillance aims to uphold fairness and integrity within the insurance system—principles that serve the interests of all Canadians.

If you find yourself faced with an insurance claim that you need help navigating, NOVA Injury Law is here to help. They have a team of lawyers ready to handle the difficulty and complex legal issues to best serve their clients. To learn more or to schedule a free consultation regarding an insurance claim, contact NOVA Injury Law today at info@novainjurylaw.com.