Insurance companies should adopt a program with premium reductions for policies containing a polygraph verification clause. The clause would consist of a written contract between the insured and insurer stating that prior to the payment of any claim, the company would have the right to ask the insured to submit to a polygraph examination for verification of all aspects of the claim. The examination would be conducted only when the insurance company investigators believe that such action is advisable or necessary. Despite misunderstandings to the contrary, traditional contract law analysis would favor inclusion of a polygraph verification clause within an insurance policy. In addition, recent case law suggests a growing acceptability of polygraph as a means of assisting both the courts and insurance companies in identifying instances of insurance fraud. The deterrent effect on fraudulent claims would be beneficial to insurance companies, and the reduction of such claims should be passed on directly to the policyholders participating in such a program. Types of fraudulent claims which would be reduced include alleged automobile theft, automobile injury fraud, slip and fall scams, inflated billing schemes, and arson for profit. Seven references are provided.