June 16, 2011 |

Insurance Coverage for Embezzlement

The factual circumstances here were somewhat unusual. Our client’s former employee didn’t just take money. Instead, he hired vendors for certain services and accepted large kickbacks. The insurance policy was broad enough to cover whatever the client lost as a result of employee dishonesty. The insurer argued that since the dishonest vendors were still providing a necessary service, a significant amount should be deducted from the claim for value received. Therefore, at the time we were retained, the insurer was offering to pay only 70% of the policy limit. We reviewed the files which had been compiled, we wrote a few letters, and we persuaded the insurer to hold a face-to-face meeting in California, even though the claims representative was based on the East Coast. We met, we explained our position, and the insurer then offered to pay 100% of the policy limit, without filing suit. Our fees were approximately 5% of the increase we obtained.