December 31, 2003
The shock of discovering that a trusted employee has secretly robbed the company often leads to an equally troubling aftershock: finding that the limit of coverage on the current crime insurance policy appears insufficient. Many policyholders, like the hungry children in Charles Dickens’ “Oliver Twist,” meekly accept their meager lot, unaware that they may well deserve more from their standard commercial crime insurance policies, because multiple limits may apply. Insurers may deride this approach as “stacking,” but that term does not appear in commercial crime insurance or any other policies. Instead, the policies often provide coverage up to stated limits for each “occurrence,” perhaps subject to “policy period,” “non cumulation” and “extended discovery” clauses. Courts construing these provisions recognize that multiple limits may apply to employee dishonesty losses that continued undetected over several successive policy periods. While the current policy is likely to cover the concealed losses from prior policy periods (under “discovery” and “superseded suretyship” provisions), if such losses exceed the limit of the current policy, prior policies provide additional coverage, subject to their own separate limit.