July 2009 Dec Page

Question of the Month

Theft claims based on shortage of an insured's physical property as determined by an inventory computation present difficult problems. The main problem is establishing the cause of the shortage without depending solely on the use of inventory computations because the commercial crime policy excludes coverage for a loss that can be shown only by such computations.

The inventory shortages exclusion came into use in the 1950s and was designed to protect the insurer from claims based on mistakes or falsified computations in claims involving employee fidelity policies. Today, there are many differing interpretations of the inventory shortage exclusion, with some courts strictly applying the exclusion and others being more liberal in their interpretation.

Continue Reading for Free

Register and gain access to:

  • Quality content from industry experts with over 60 years insurance experience, combined
  • Customizable alerts of changes in relevant policies and trends
  • Search and navigate Q&As to find answers to your specific questions
  • Filter by article, discussion, analysis and more to find the exact information you’re looking for
  • Continually updated to bring you the latest reports, trending topics, and coverage analysis