In this paper we have analyzed the huge volume of warranty data for segregating the fraudulent warranty claims using pattern recognition and clustering methodology. Recent survey of automotive industry shows up to 10% of warranty costs are related to warranty claims fraud, costing manufacturers several billions of dollars. Most of the automotive companies are suspecting and aware of warranty fraud. But they are not sure of the extent and ways to eliminate it. The existing methods to detect warranty fraud are very complex and expensive as they are dealing with inaccurate and vague data, causing manufacturers to bear the excessive costs. We are proposing model to find anomalies on warranty data along with component failure data and patterns based on historic warranty claims data under particular region and for specific component as the data are of high volume. We are managing to isolate all the imapcting the factors that indicate a claim, that has a high probability of fraudulence such as failure date and claim date, mode of failure etc., In addition to this we discover suspecting claims that have the greatest adjustment potential for further review by claim process. We altogether integrating data with with claims processing, reports and business rules along with reported mode of failure as we are minimizing changes to existing systems, since the analysis is carried out by identifying patterns. Since we are working with factual data, it gives more room to identify the actual cost involved on warranty claim.