Synopsis:

A client is a large manufacturer/distributor of specialty steel products that stores large quantities of product at warehouses across North America.

• Employees at one of the client’s U.S. facilities notices numerous discrepancies between computer-recorded and actual inventory counts over a 3-month period.
• Head office performs an audit to confirm the discrepancies and verifies over $300,000 of missing inventory.
• Local authorities investigate but do not perform a thorough site search as no signs of forced entry are discovered at this time.
• Client is concerned that employees are involved, but no evidence is yet available.
• Loss is reported to HKMB HUB International and our review of the circumstances reveals that the loss could be covered under either the Property or Crime policy.
• HKMB HUB advises the client of coverage hurdles under each policy and makes recommendations to ensure actual cause of loss is determined (otherwise ‘mysterious disappearance’ exclusion could apply).
• Both Property and Crime insurers decline coverage under ‘mysterious disappearance’, and argue the other insurer should respond.
• HKMB HUB recommends to the client that they hire a private investigator to explore the potentiality of employee involvement and to conduct a more thorough investigation.
• The private investigator rules out employee involvement and finds signs of forced entry.
• This new evidence is provided to the Property insurer who agrees that coverage is indeed triggered under their policy.
• However, the Property insurer indicates coverage is subject to multiple deductibles since such a large quantity of steel would have to have been taken over several occurrences.
• The Property insurer then further argues that the exclusion for ‘loss discovered upon taking inventory’ applies, and again declines coverage.
• HKMB HUB argues that this exclusion does not apply as other evidence of theft existed.
• HKMB HUB performs detailed legal research and discovers relevant precedent cases that supports the position of the client both with respect to the exclusion and with respect to the multiple deductibles.
• HKMB HUB meets with representatives of the Property insurer and negotiates a full settlement with the application of only two deductibles.

Client is pleased with the settlement and the efforts of HKMB HUB in advocating their interest.