Fidelity Bonds: Advocating Direct Loss from Employee Theft, Fraudulent Transactions and Other Covered Events

Navigating the Scope of Coverage From Policyholder and Insurer Perspectives

Recording of a 90-minute CLE webinar with Q&A

Conducted on Wednesday, October 8, 2014

Recorded event now available

or call 1-800-926-7926
Course Materials

This CLE course will provide insurance counsel with a review of covered losses under a fidelity policy, focusing on the ”direct cause” issue, recent case law developments, including the impact of MF Global on other employee theft, fraud and data breach situations, and coverage arguments from both policyholder and insurer perspectives.


The number of claims involving fidelity bonds has increased due to the recent economic downturn with increased oversight and detection of potentially fraudulent transactions. Covered events generally include employee theft, good faith reliance on false documents, reliance on counterfeit or unauthorized instructions, and general theft or fraud.

Fidelity bonds typically require the loss to be a “direct” result of a covered event. What is a “direct” result vs. an intervening cause is frequently a point of contention between policyholders and insurers. How courts interpret “direct” result vary among jurisdictions.

The issue of direct vs. proximate cause of the loss was recently litigated in a case against MF Global due to losses the company suffered from a rogue trader. The court held that third-party trading losses constituted direct damages under the company's fidelity policy. Claims under fidelity bonds were common by the recent Madoff Ponzi scheme victims.

Listen as our authoritative panel of practitioners looks at fidelity bonds from both the insurer and policyholder perspective, recent trends in fidelity claims, covered losses, including the “direct” cause issue, and case law developments, including the impact of MF Global on other employee theft, fraud and data breach situations.



  1. Current claims trends and developments
  2. Covered losses
  3. Limitations on coverage
  4. Direct cause requirement
  5. Recent case law, including MF Global


The panel will review these and other key questions:

  • What are recent trends in fidelity bond claims?
  • In what situations is coverage for employee theft or fraud under a fidelity bond vs. liability policy questionable or uncertain?
  • What factors do courts look at in determining whether a loss is a “direct” vs. a dependent or intervening result of a covered event?
  • What impact does the recent ruling in MF Global have on other employee theft, fraud and data breach situations?


Margo S. Brownell
Margo S. Brownell

Maslon Edelman Borman & Brand

Ms. Brownell is Head of the firm’s Insurance Litigation and Insurance Coverage Counseling Groups. She represents...  |  Read More

Joseph P. Ceronsky
Joseph P. Ceronsky

Maslon Edelman Borman & Brand

Mr. Ceronsky is a member of the firm's Litigation Group and practices in the areas of general business, tort and...  |  Read More

CharCretia V. Di Bartolo
CharCretia V. Di Bartolo

Hinshaw & Culbertson

Ms. Di Bartolo is a trial attorney with a broad litigation practice encompassing fidelity and surety, personal injury...  |  Read More

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