EMCOR Group: Fourth Circuit Applies Prior Insurance Provision To Restrict Coverage Under Commercial Crime Policy

In EMCOR Group, Inc. v. Great American Insurance Company, the Fourth Circuit Court of Appeals applied a prior insurance provision in a Commercial Crime Policy to restrict coverage to only the immediate prior year that the insured maintained fidelity coverage, rather than the previous five years, as asserted by the insured. The decision highlights the importance of properly analyzing and applying prior insurance provisions in loss-sustained forms in multi-year loss scenarios.

The Facts

EMCOR is a construction and building maintenance company. In 2005, it reported a $10 million employee dishonesty loss to Great American in respect of allegedly fraudulent acts of employees occurring between December 1, 1999 and December 1, 2003. This loss was reported under EMCOR's December 1, 2004-December 1, 2005 Commercial Crime Policy (the "2004 Policy").