Forensic accounting services are useful for a number of types of legal cases, but they can also be quite helpful for insurance claims. A forensic accountant uses many of the same techniques and tricks that regular accountants utilize. The difference is that while a regular accountant uses their financial acumen to assess the records as they appear, a forensic accountant uses theirs to look for inconsistencies and investigate financial questions.
Forensic accountants can be quite helpful in determining anything from the source of commingled marital funds to figuring out how much money an insurance claim has cost an individual. Here’s an overview of how forensic accounting can help your insurance claim.
Why hire a forensic accountant?
Both insurance companies and claimants might want to hire a forensic accountant—and many insurance companies already do. When a claimant files an insurance claim, they’re asking the company to pay back a certain amount of economic damages. However, there might be questions or disagreements as to the true extent of that damage. While insurance companies have a vested interest in keeping their payouts low, claimants usually want to maximize their payout.
Forensic accountants can not only ferret out the true cost of the claim so far, but they can also make predictions as to how that harm may carry over in the future. They do this by combining historical data, the current conditions and how future conditions will affect the claimant. This allows them to create a full picture of the economic damage involved.
You might see a forensic accountant working on personal injury cases, for example: they can go through a claimant’s personal financial records to determine how much an injury has already cost them, and how much it will cost them in the future. This is often necessary when a claimant has argued that their injuries have cost them future income and other benefits.
Another common type of forensic accounting case is when a party needs to know just how much damage a business has suffered. For example, when something has happened that affects their income or valuation, a forensic accountant can piece together information about how exactly they were affected.
Should I hire a forensic accountant?
If you’re an individual claimant, your attorney will be able to advise you as to whether working with a forensic accountant is necessary. It’s usually a good idea to hire one when you need to calculate the cost of future expenses, such as a damaged earning capacity, future medical expenses or future living expenses. For example, if you were seriously injured in a car crash and now need in-home care to perform basic everyday tasks, a forensic accountant can determine how much economic damage you’ll suffer over the course of your lifetime.
In other words, any time there’s a difficult financial situation to untangle, working with a forensic accountant can be helpful.
If you need to hire a forensic accountant for your insurance claim, get in touch with Medina & Company Consulting, Inc. today to learn more about how we can assist you.