Kyle, you are correct, you should not be responsible, but the fact is MN law requires you to pay unless you can show the bed bugs are a result of willful, malicious, or irresponsible conduct of the tenant or a person visiting the tenant, which is nearly impossible to prove. 

Even with the bad actors in the space, it's people that are falling for it.

There are many guys on the street corner who are not licensed or registered claiming they are private lenders, if they don't meet the definition, they are simply illegal lenders.Being in the business of something also takes into consideration the intent of the actor, the amount made, the frequency of transactions, their other sources of income or revenue, just as the IRS sees your business activities. 

These damages are intended to punish the defendant for egregious or malicious behavior.

Does the policy cover theft (likely no if the policy was purchased as a vacant property) but it might cover vandalism and malicious mischief. 

If not the bank starts the process that's the issue I see..Then don't get me started on the bad actors who will learn this and will not give two shakes for the seller .. once they realize their credit is not on the line .. rip rents all sorts of bad stuff. that's were i get the heartburn..

Any specific red flags to identify bad actors and avoid doing business with them in these areas?

Also know that departing tenants can sometimes be malicious...

Companies like this push the limits until some landmark class action suit is filed and one bad actor (i.e.

It did, however, clear out some bad actors, so it wasn't all bad.