The quality of your fraud insurance claim outcome depends significantly on how quickly and correctly you respond when fraud is discovered. Unlike a property claim (where the damage is obvious and immediate), fraud claims require specific steps that can make or break your coverage.
Step 1: Notify your insurer immediately — don't wait for certainty
The single most common mistake in fraud insurance claims is delayed notification. Most policies require you to notify your insurer "as soon as reasonably possible" after you first have reasonable grounds to believe a covered loss has occurred — not after you have confirmed it.
If you suspect employee fraud, or discover what looks like a fraudulent transfer, call your broker and insurer immediately — even if you're not certain. Waiting to gather evidence before notifying can breach the policy condition and jeopardise your entire claim.
Your broker should be your first call. They will guide you through the notification process, help you present the facts correctly, and manage the insurer relationship throughout.
Step 2: Preserve all evidence
Do not delete, alter, or allow access to any documents, systems, or communications that may be relevant to the fraud until your insurer has given guidance. This includes: - Bank statements and transaction records - Emails and communications with the suspected fraudster or third party - Accounting records and reconciliations - System access logs - CCTV footage (if relevant)
Instruct IT to preserve system logs and do not allow the suspected employee access to systems before forensic preservation is complete.
Step 3: Report to NZ Police
Most fraud policies require you to report the fraud to NZ Police. Call 105 or file online at police.govt.nz. Note the police report number — you will need this for the claim. The police investigation may proceed separately from and at a different pace from the insurance claim.
Step 4: Engage forensic specialists
For significant fraud claims, your insurer will typically appoint or approve forensic specialists — forensic accountants, digital forensics firms, or loss adjusters. Follow their instructions on evidence preservation and access.
Do not conduct your own forensic investigation independently before engaging with the insurer. Self-directed investigation can inadvertently corrupt digital evidence.
Step 5: Quantify the loss
Work with your forensic accountant to quantify the full extent of the loss. This typically involves: - Identifying the period of the fraud (start to discovery) - Tracing all fraudulent transactions - Calculating the total direct financial loss - Distinguishing direct losses (covered) from consequential losses (often excluded)
Common mistakes that cost you coverage
- •Confronting the suspected fraudster before securing evidence — this often results in evidence destruction
- •Waiting weeks before reporting to your insurer
- •Settling with or paying an employee before the insurance claim is finalised (this can release the insurer from subrogation rights)
- •Destroying records in the ordinary course of business without realising they are relevant
- •Agreeing to a deed of settlement or confidentiality agreement with the fraudster without insurer consent
Timeframes
Simple fidelity claims with clear evidence: 3-6 months Complex cases with disputed facts, large amounts, or international elements: 12-24 months Cyber insurance claims involving breach response: typically 3-9 months from notification to finalisation
What the insurer will check
Your insurer will assess: whether the loss falls within the policy coverage, whether you complied with notification requirements, whether any policy exclusions apply (prior acts, authorised payments, etc.), and whether the loss is fully quantified. Cooperation with the investigation is typically a condition of coverage.
Working with an experienced broker throughout the claims process significantly improves outcomes — they can advocate on your behalf and help navigate coverage interpretations.