Every midnight when the young employee closed up the owner's liquor store, he was required to turn on the night alarm. If the alarm company detected that the alarm had not been turned on, they had an obligation to phone the store's owner and report that the alarm was off. The alarm company had a general liability policy that excluded "bodily injury arising out of any act, error or omission ... in the rendering or failing to render alarm monitoring or similar services," basically a professional services exclusion.
One night, just before midnight, robbers entered the liquor store, and beat and kidnapped the employee. As a result, the alarm was not turned on. The alarm company failed to notify the owner until 3 a.m. that morning, three hours after the kidnap and robbery. The insured got to the store by 3:30 a.m., found it had been robbed and the employee missing, and notified the police. The employee was found later that morning tied to a tree, and dead from his injuries. The deceased employee's estate filed a wrongful death action against the alarm company, but the insurance company declined to defend their insured as the claim arose out of the failure to render the alarm monitoring. The Indiana Supreme Court upheld lower court decisions in favor of the insurer.
This case shows how important it is for all parties - the insured, the agent or broker, and the insurer's adjuster - to read and fully understand all of the implications in a policy of insurance. The Commercial Crime Policy is complex, and adjusters must know what is and is not a covered loss. For example, burglary and robbery are both forms of larceny, but in crime insurance they may be separately defined and insured. When the ramifications of computer-related fraud losses are added, figuring out what is or is not covered is not always easy.
Coverage is the single-most important factor in any claim. That is why coverage analysis is given primary emphasis at Crawford Educational Services, which offers classroom training as well as online claims education through KMC OnDemandSM.
