New Fed Mortgage Corp. v. National Union Fire Insurance

**Insurance Company Wins Dispute Over Employee Fraud Coverage** This case involved a dispute between New Fed Mortgage Corporation and its insurance company, National Union Fire Insurance. New Fed Mortgage had purchased an errors and omissions insurance policy to protect against workplace mistakes and professional liability claims. When one of New Fed's employees falsified credit reports, the company filed a claim with its insurer to cover the resulting damages and legal costs. National Union Fire Insurance refused to pay the claim, arguing that the employee's actions constituted fraud and dishonesty, which were specifically excluded from coverage under the policy. New Fed Mortgage sued the insurance company, claiming they should honor the policy and pay for the damages. The court sided with the insurance company, ruling that the employee's falsification of credit reports clearly fell under the policy's fraud and dishonesty exclusion. The judge granted summary judgment in favor of National Union, meaning New Fed Mortgage received no coverage for the incident. **What This Means for Workers:** This ruling highlights that when employees engage in fraudulent activities like falsifying documents, their employers may not have insurance protection to cover resulting damages. This could lead to more serious consequences for workers who commit fraud, as companies may pursue stronger disciplinary action or legal remedies when insurance won't cover their losses.