They suspect fraud. Have you made claims before? Next they may ask you to submit to an EUO (Examination Under Oath - similiar to a deposition). You have a duty to cooperate pursuant to your policy. If you don't comply Allstate will deny your claim and your only choice will be to sue and then a Judge will decide whether you failed to cooperate. If the Judge finds you didn't cooperate then you will lose.
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Your insurance policy is the contract that governs the parties' rights, so your best course of action is to hire your own insurance counsel to review your specific policy. They certainly do have the right o investigate your claim, and yes, your instincts are right, they're not sure if your claim is fraudulent, so there may have been something suspicious about it. Getting your own counsel will level the playing field.
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Consult with an attorney who can check what they are up to - do this BEFORE responding to their request. Contact an attorney ASAP
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