Exclusion for False Pretense, Trick, or Scheme

Patrick Morin, an acquaintance who is a CPA, wrote an article recently on risk management.  The piece reviews what steps an organization can take to understand and mitigate risk.  The article’s example of exposure points out an event not covered by most property insurance.

Almost all property insurance policies exclude loss by false pretense or trick.

“We will not pay for loss or damage caused by or resulting from…  Voluntary parting with any property by you or anyone else to whom you have entrusted the property if induced to do so by any fraudulent scheme, trick, device or false pretense.”

A guy shows up and talks your employee into loading up his truck.  After the guy drives away you figure out he was not who he said he was, and you are out $50,000 in product.

No coverage.