August 2, 2012

An insured was issued commercial crime coverage form CR 00 29 07 02 (loss sustained) ed. 2001. The insured states that records are incomplete to establish the full loss amount of the loss and requests that the insurer pay expenses for a forensic accounting exam to establish the amount of the loss. Is the insurer obligated to pay this expense to establish or verify the amount of loss? Is a criminal conviction of an employee required to trigger coverage for theft by employee under employee dishonesty coverage?

Texas Subscriber

The costs the insured incurs to establish the existence or the amount of the loss is excluded under the indirect loss exclusion. A criminal conviction is not required in order for theft by employee coverage to be triggered; it is possible to know than an employee caused the theft, but not know which employee was the thief.