Weekly Law Resume - December 16, 2010: Insurance Coverage - "Loss of Use"

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The term "property damage" is defined by most CGL policies to include the "loss of use" of physical or tangible property. This case considered whether an underlying action for conversion of monies qualified as "property damage" for the loss of use of the monies taken. Advanced Network, Inc. (ANI) contracted with Mission Federal Credit Union (Mission) to service cash distribution machines in Mission's stores. In October of 2004, it was discovered that an ANI employee had been stealing cash from Mission's machines, which he concealed by filing false records. Ultimately, the employee pled guilty in a federal criminal case to misappropriating almost $2,000,000 between 2000 and 2004. Mission made a demand against its fidelity bond holder, Cumis Insurance Company (Cumis), which reimbursed the entire amount, less Mission's deductible. Thereafter, in August of 2005, Cumis filed suit against ANI in federal court for equitable subrogation, negligence, breach of contract and respondeat superior.The term "property damage" is defined by most CGL policies to include the "loss of use" of physical or tangible property. This case considered whether an underlying action for conversion of monies qualified as "property damage" for the loss of use of the monies taken.

Advanced Network, Inc. (ANI) contracted with Mission Federal Credit Union (Mission) to service cash distribution machines in Mission's stores. In October of 2004, it was discovered that an ANI employee had been stealing cash from Mission's machines, which he concealed by filing false records. Ultimately, the employee pled guilty in a federal criminal case to misappropriating almost $2,000,000 between 2000 and 2004. Mission made a demand against its fidelity bond holder, Cumis Insurance Company (Cumis), which reimbursed the entire amount, less Mission's deductible. Thereafter, in August of 2005, Cumis filed suit against ANI in federal court for equitable subrogation, negligence, breach of contract and respondeat superior.

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