FCL Fidelity Blog
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C.S. McCrossan Inc.: Eighth Circuit applies Crime Policy’s Authorized Representative Exclusion in finding No Coverage for loss caused by Insured’s Property Manager’s Employee
On August 6, 2019 the Eighth Circuit Court of Appeals released its decision in C.S. McCrossan Inc. v. Federal Insurance Company. The decision addresses a host of coverage issues, including the application of the “Authorized Representative” exclusion and the definitions of “Subsidiary” and “Contractual Independent Contractor.” The case is instructive for fidelity claims and underwriting professionals, as well as brokers and corporate risk managers. The Facts C.S. McCrossan Inc. (“McCrossan”) maintained a subsidiary, Blakeley Properties, LLC (“Blakeley”). One of McCrossan’s owners also owned a separate company, Stewart Properties, LLC (“Stewart”). Blakeley and Stewart owned commercial rental properties. Through intermediate
Starr: New York Supreme Court applies Termination condition in finding No Coverage under Fidelity Bond for Loss caused to Insurer by Managing General Agent
In the recent decision of Starr Insurance Holdings, Inc. v. United States Specialty Insurance Company, the Supreme Court of the State of New York held that the termination condition applied to terminate coverage in respect of losses allegedly caused to an insured insurance company (itself a holder of a fidelity bond issued by two other carriers) by the insured’s managing general agent (“MGA”)/broker. Finding that the insured knew of the MGA’s dishonest acts prior to obtaining fidelity coverage, the Court applied the bond’s termination condition to hold that coverage terminated in respect of the MGA as of the inception of
Posco Daewoo: U.S. District Court applies Ownership Condition in rejecting Creditor’s “Reverse” Social Engineering Fraud Claim under its own Crime Policy
On November 19, 2018, the U.S. District Court for the District of New Jersey released its decision in Posco Daewoo America Corp. v. Allnex USA, Inc. and Travelers Casualty and Surety Company of America. The decision represents a “sequel” to the Court’s 2017 decision arising out of the same claim (see our November 6, 2017 post). The case features an interesting twist on the usual social engineering fraud claim scenario, in that it was the intended payee of the funds, not the payor, which asserted a claim under its own crime policy for recovery of funds which the payor had
CP Food: U.S. District Court finds No Coverage under Crime Policy for Insured’s Vicarious Liability for Theft of Customers’ Funds
In the recent decision of CP Food & Beverage, Inc. v. United States Fire Insurance Company, the U.S. District Court for the District of Nevada held that coverage was not available under a crime policy where the insured’s employees had defrauded the insured’s customers through misuse of customer credit cards. The decision makes important findings regarding the appropriate test for “direct loss” causation in a crime policy, and reaffirms the general principle that crime policies are not intended to indemnify insureds for their vicarious liability arising from employees’ theft of third parties’ property. The Facts CP Food & Beverage Inc.
Aqua Star: Ninth Circuit applies Authorized Entry Exclusion to Social Engineering Fraud Claim
Jump To: The Facts | The Decision | The Conclusion On April 17, 2018, the Ninth Circuit Court of Appeals released its decision in Aqua Star (USA) Corp. v. Travelers Casualty and Surety Company of America, affirming the decision of the U.S. District Court for the Western District of Washington (see our July 19, 2016 post). The decision offers guidance to fidelity insurers with respect to the application of the “authorized entry” exclusion found in the base wording of many commercial crime policies (sometimes referred to as the “authorized access” exclusion), and illustrates how this exclusion may operate in the
Hudson Heritage: U.S. District Court dismisses Fraudulent Loans claim where Credit Union failed to plausibly plead Alteration of Original Documents of Title
JUMP TO: THE FACTS | THE CUMIS COVERAGE | THE CONCLUSION On January 22, 2018, the U.S. District Court for the Southern District of New York released its decision in Hudson Heritage Federal Credit Union v. CUMIS Insurance Society, Inc., dismissing the insured credit union’s claim pursuant to Federal Rule 12(b)(6) for failure to state a claim upon which relief could be granted. According to its amended complaint, the insured had granted several vehicle finance loans on the strength of photocopies or electronic copies of New York State Department of Motor Vehicles (“DMV”) title documents. The copies received by the insured had been falsified to
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TOPICS
- Authorized Access/Entry Exclusion
- Authorized Representative Exclusion
- Bills of Exchange Act (Canada)
- Computer Fraud
- Counterfeit
- Direct Loss
- Employee Theft
- Forgery
- Funds Transfer Fraud
- Inventory Exclusion
- Manifest Intent
- Other Property
- Outside Investment Advisor Rider
- Ownership
- Prior Insurance
- Securities Broker Exclusion
- Securities Coverage
- Social Engineering Fraud
- Standing
- Subrogation
- Subsidiary
- Suit Limitation Provision
- Termination
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RECENT POSTS
- Sportsinsurance.com: Second Circuit applies Suit Limitation Period to Dismiss Action on Commercial Crime Policy
- Star Title Partners: Eleventh Circuit finds No Coverage for Social Engineering Fraud Loss under Cybercrime Endorsement to Cyber Protection Policy
- SJ Computers: U.S. District Court finds No Coverage for Business Email Compromise Loss under Computer Fraud Coverage
- RealPage: U.S. District Court finds Funds lost by Third Party Payments Processor do not meet Commercial Crime Policy’s Ownership Condition
- Mississippi Silicon: Fifth Circuit finds No Coverage for Social Engineering Fraud Loss under Crime Policy’s Computer Fraud Coverage