Insurance Disputes Regarding Theft & Fraud: Getting Your Losses Covered

In Miami, the word “insurance” usually brings up thoughts of hurricane damage, especially this time of year. But we purchase insurance to insulate ourselves from many different types of risks, and that includes the risk of losses caused by theft and other forms of dishonest conduct. When businesses purchase coverage for these types of losses, it is often referred to as fidelity and crime insurance. For those insuring homes and other private property from crime losses due to theft, vandalism, and other causes, the coverage details may be buried in a general policy

Although insurers are quick to explain why you should have this type of coverage, every Miami insurance claim lawyer knows that insurance companies seem to be automatically suspicious when you file a claim for losses. Disputes are common. At Ver Ploeg & Marino, we’ve helped clients with claims under their fidelity and crime policies for decades, so we’ve seen just about every excuse an insurance company can provide as their justification for denying these claims. While we can’t provide customized advice about handling a claim or resolving a dispute without knowing the unique circumstances involved, here are some factors to be aware of when dealing with claims for theft, fraud, and similar losses.

Understand Your Coverage

Depending on the situation, the losses could involve one of many different types of insurance coverage. Although there may be some overlap, these are generally distinct types of policies.

Fidelity Bonds

Despite the financial implications of the name, fidelity bonds are a type of insurance that provides protection from losses caused by the fraudulent or dishonest acts of employees and others in positions of trust within a company. Some insurance companies refer to this coverage as employee dishonesty insurance. Companies may offer specialized fidelity bonds, such as business service bonds that protect against theft of a customer’s property and employee dishonesty bonds that protect against the appropriation and misuse of financial or personal data. Businesses can also obtain third-party fidelity bonds that protect against losses stemming from embezzlement or fraud by those in a close working relationship who are not employees, such as independent contractors or consultants.

It is sad to think that losses from employee fraud and theft pose such a great and consistent risk that businesses need to routinely pay for coverage to protect against these losses, but industry reports show that concerns are based on solid evidence. For instance, the National Retail Federation reports that nearly one-third of losses can be attributed to internal theft, including theft of cash deposits, refund fraud, and taking or passing off merchandise. Fidelity bonds are often written with very specific terms, so it is important to ensure that the terms cover the particular loss at issue.

Crime Insurance

Commercial crime insurance policies can cover losses from many different types of crimes, including:

• Theft or damage to property on site or in transit
• Computer hacking fraud
• Receipt of counterfeit currency
• Forgery
• Social engineering/online impersonation fraud

Losses may stem from external or internal sources, so there can be overlap with fidelity bond coverage.

It is important to understand that crime insurance policies are often set up to cover “named perils” only. That means that a crime must fit within one of the categories described in the policy to be covered. A Miami insurance coverage lawyer will often need to help resolve disputes where a policyholder expects a loss to be covered because it appears to fit within a named category, while the insurance company argues that it falls outside of coverage.

Crime Coverage for HOAs and Individual Property Owners

Florida law requires many homeowners’ associations to maintain a fidelity bond or similar crime coverage to protect members from potential fraud by property management companies and board members. In addition, these organizations often purchase other forms of crime coverage to protect from losses due to theft, vandalism, and other causes.

Most homeowners’ insurance policies cover losses from theft, but they may contain exclusions and limitations. For instance, policies frequently exclude theft by tenants or household members. In addition, they may exclude property that disappears under circumstances that cannot be easily explained, such as when there is no evidence of forced entry. A Miami insurance claim lawyer is often asked to assist when the insurance company insists a loss was caused by a family member or that the loss report is fraudulent. In some cases, the insurance company’s actions can lead to a claim against them for bad faith.

Finally, it is important to be aware that crime involving theft or damage to a car, truck, boat, trailer, or other vehicle is likely to only be covered under the vehicle’s comprehensive insurance policy rather than a homeowner’s policy.

Interpretation of Policy Terms

In addition to understanding the type of coverage provided under the applicable policy, it is important to know how to apply other terms in the policy. For instance, some policies cover theft and fraud losses only when the losses are sustained during the policy term, while others cover losses that are discovered during the policy term, even if they occurred before the policy took effect.

Exclusions, limitations, named peril specifications, and a host of other terms in a policy often provide grounds for disputes. Sometimes, the insurance company denies or limits claims based on a reasonable interpretation of policy terms. Many other times, however, the insurance company’s reaction is unfounded and needs to be properly challenged. In these situations, a Miami insurance coverage lawyer can work to secure full payment for the losses.

When the Insurance Company Refuses to Cover Your Theft Loss, Find Out How Ver Ploeg & Marino May Be Able to Assist

Insurance companies love to say “no.” While they may be justified in doing so because a loss is not covered under the terms of the policy, it is important to understand when their answer is unreasonable and in violation of their policy obligations. 

The experienced insurance attorneys at Ver Ploeg & Marino can analyze the situation and the terms of the policy. We know how to fight effectively in and out of court to force insurance companies to honor their obligations to policyholders. To learn more about the assistance we can provide in your situation, call us at 305-577-3996 or contact us online now.

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