Stolen, but also lost?

Two employees entered a series of unauthorized loan transactions on behalf of their employer and took the proceeds.  BJ Services v. Great American Insurance Co., No. 12-20527 (Sept. 6, 2013, unpublished).  The employer’s carrier denied coverage, arguing that the losses did not “directly” result from employee dishonesty, in part because the company never actually got the money.  The district court agreed but the Fifth Circuit reversed, noting that the employees had “apparent” authority to enter the transactions, even if they did not have “actual” authority, and thus created binding contracts on behalf of their employer that made the losses “direct” within the meaning of the policy.

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