The most important — and often toughest — part of an adjuster's job is determining coverage based on policy language. Beginning this month, Claims will be publishing a coverage question in each issue along with an analysis as provided by the dedicated editorial staff of FC&S Online (which, like Claims, is a division of the National Underwriter Company). These experts, who have a combined 85 years of coverage experience, are available to answer situation-specific questions from subscribers to FC&S Online and the print FC&S Bulletins, found at www.fcands.com.

Question: Our insured has coverage under a CP 00 01 (10/90) building and property form. The policy also carries the CR 00 01 (10/90) employee dishonesty form. This is a retail clothing store. The store manager had been stealing items and reporting them in the computer system as “removed from inventory,” which is a code reserved for damaged or liquidated inventory. This went on for two years before the insured caught on.

I know there is an exclusion under the CR 00 01 for inventory shortages, and I believe this loss is excluded. However, I would like another opinion before I make a final decision. — Connecticut Subscriber