Fidelity Insurer Must Cover Money Stolen From Investment Accounts
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Fidelity Insurer Must Cover Money Stolen From Investment Accounts

First Federal held a fidelity insurance policy with Progressive Casualty Insurance Company, which covered “loss resulting directly from dishonest or fraudulent acts committed by an Employee, acting alone or in collusion with others.” A financial advisor of First Federal transferred money from brokerage accounts that he managed to his personal accounts, which cost First Federal just over $930,000.  The Sixth Circuit determined that these losses were covered under the policy, casting aside arguments by the insurer that the disclaimers signed by each customer precludes coverage and that the losses were not direct.  However, a lengthy dissent calls into question whether the losses are “covered” property as well as whether the losses were direct.

First Defiance Financial Corporation v. Progressive Casualty Insurance Co., Nos. 10-3943, 10-3944 (6th Cir. Aug. 1, 2012).
 
FIrst Defiance Financial Corporation v Progresive Casualty Insurance Co.pdf