Volume 140

AUGUST 2018

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COURT CASE:

SEPARATE CLAIMS QUALIFY UNDER SEPARATE POLICIES

Philadelphia Indemnity Insurance Company (Philadelphia) provided four separate crime policies from 1/01/2010 through 1/10/2014 to First United Methodist Church (First). Initially, due to a financial audit, it was discovered that First’s finance manager was embezzling church funds for a total amount of $200,000. The embezzlements occurred beginning in 2008. First discovered the embezzling in December, 2012 and reported the loss in January, 2013. Philadelphia paid its policy limit of $50,000 for the policy period beginning in 2013. The parties disagreed that the policy limits were also due for the policies beginning in 2011 and 2012. Both parties filed for summary judgment. When the lower court found in favor of First, resulting in a $100,000 award plus pre-judgment interest and court costs, Philadelphia appealed.

Philadelphia, upon appeal, argued that their policy language with regard to the non-cumulation of separate policy limits, their wording of “occurrence” with regard to employee dishonesty,” the separate policy numbers provided for the crime policies issued to First all justified their limiting their obligation to paying the policy limit just for the last loss discovered. Philadelphia’s position was that it was the only act of embezzlement that was eligible for coverage under the series of crime policies.

First reasserted its argument that the policy wording permitted several policies to respond to the ongoing acts of embezzlement and that the timing of their discovery allowed reimbursement from two, earlier policies. It also asserted that Philadelphia’s policy wording was subject to different interpretation and the resulting ambiguity should favor coverage from several policies.

The higher court reviewed several cases that were presented by both parties as relevant to the matter along with several portions of relevant policy language. After examination of several cases the higher court decided that Philadelphia’s policy language was subject to more than one meaning and that the insurer’s argument that its policy language restricted recovery from previous policies was not supported. Specifically, the court viewed the acts of embezzlement as being separate occurrences covered by separate policies. The lower court decision in favor of First was affirmed.

First United Methodist Church of Stillwater, Inc. Plaintiff-Appellee, v. Philadelphia Indemnity Insurance Company, a foreign corporation d/b/a Philadelphia Insurance Companies, Defendant-Appellant. No. 114396. Court of Appeals of Oklahoma, Division II. Filed August 26, 2016. Affirmed. VersusLaw 2016.OK.0000141<http://www[.]versuslaw[.]com>