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Identifying fraud in business interruption claims

Insurers should watch for several factors that could be red flags for fraudulent claims: opportunity, incentive and rationalization.

By Tracy Santa | September 21, 2022 at 12:00 AM
Looking for the word fraud with a magnifying glass. While most claims including business interruption are valid and legitimate, insurance companies have to be leery that there are bad-faith actors trying to find an easy payday. (Photo: RHa BacnheBCkar/Adobe Stock)

Business income (interruption) insurance has received a lot of attention since the beginning of the pandemic due to business closures across the globe. Unfortunately for business owners (in the U.S. and most other countries), business income losses were not covered due to a virus exclusion.

The businesses forced to close or curtail their normal business operations due to COVID-19 restrictions or requirements suffered tremendous losses, which were unrecoverable under their policies. While some businesses were able to pivot and thrive during the pandemic, many had to close their doors permanently. Business owners need to pay close attention to policy language to have a clear understanding of their coverage in the event of a business interruption.

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