Originally published by Risk Management
In current discussion of fraud and crime coverage, emerging
cyberrisks and appalling financial schemes grab the headlines, and
the direct loss conundrum captivates coverage counsel. While
policyholders and their risk managers should of course monitor
those issues, they also should remember the basic timing
requirements that could undermine otherwise valid claims. Recent
decisions show that even the most carefully crafted crime coverage
may have no value if policyholders wait until it is too late to
take action against dishonest employees or dissembling insurance
companies.
TERMINATION OF DISHONEST EMPLOYEES
Before claims arise, policyholders and their risk managers
should keep in mind that continuing to employ an individual after
discovering dishonest conduct may be entirely at the employer's
risk, forfeiting the protection of their fidelity or crime
insurance as to that employee. In general, fidelity and crime
policies
