AIG Loss Over Employee Theft Insurance Broadens Crime Coverage

Cargill Inc.'s recent win against an AIG unit over an employee’s fraud is poised to expand the scope of commercial crime insurance policies’ coverage, a prospect that will likely trigger insurers’ resistance.

The US Court of Appeals for the Eighth Circuit’s March 7 ruling broadens the range of damages covered under a corporate crime insurance policy, which typically addresses fraud, dishonesty and theft. It was a rare policyholder win in an insurance area that had lacked case law, attorneys say.

The appeals court held that National Union Fire Insurance Co., an AIG unit, must cover not only the $3 million ...