Claims News Service, Jan. 6, 9:22 a.m. EST -- According to a recent study by the Insurance Research Council, an estimated $319 and $432 million in bodily injury liability payments in California were attributable to claim fraud and buildup in 2002. That means almost one in three auto claims in the state contain some sort of fraud.

The study classified fraud into two categories: misrepresentation and buildup. The appearance of fraud (misrepresentation of key facts of claims) was found in almost one in ten paid California BI claims (9 percent). The appearance of buildup was more common and was found in more than one in five paid California BI claims (22 percent). Buildup refers to the exaggeration of injuries, the application of excessive medical treatment, or the intentional inflation of lost wages by an insured.

While this report shows that claim abuse in California is a significant financial problem, the percentage of claim fraud found in the state was comparable to the percentage found nationwide. The prevalence of BI claim buildup in the state was four percentage points higher than the corresponding national percentage, making the national percentage of claims containing fraud somewhere near 25 percent.