What Do Commercial Crime Policies Have in Common with the Bible?

store thefts

It is often said if one looks hard enough one can find authority for just about any proposition in the Bible.  This is perhaps another way of saying that there is plenty to argue about and discuss.  I sometimes think that commercial crime policies share this characteristic.

The most recent case to reach the courts in England addressing this controversy is Ted Baker Plc and others v. Axa Insurance Company and others [2012] EWHC1406.

The Case

The case was brought by Ted Baker the well-known clothing brand in relation to the question of entitlement to insurance cover under a commercial combined all risks policy issued by Axa in relation to  a number of stock thefts perpetrated by its employees and their accomplices over an 8-year period. The loss of stock was in excess of £1m and the consequential loss claim was for a further £3m.

There were a whole range of coverage issues the Court was asked to address. Over 20 witnesses were called.  The majority of these witnesses gave evidence of their belief as to the intended scope of cover. That fact alone speaks volumes as the clarity of the intended cover!

Theft by Employees

One of the main threshold questions which the Court had to decide was whether the policy covered theft by employees. Insurers contended that if Ted Baker had intended to take out such cover, it would either have purchased a specific fidelity policy covering the risk of theft by employees or alternatively it would have ticked a box for cover for theft by employees, which in the relevant schedule was deleted rather than ticked as confirmed.

The Court concluded that the non-selection of the “theft by employee” section shed no useful light on the question as to whether the policy as a whole was objectively intended to provide cover for employee theft.  As the Court put it:

… it is important to note that the cover under this section is on an “all risks” basis.  In my view, so far as Ted Baker is concerned if any theft by a third party (including theft by an employee) occurs and in consequence its business is “interrupted or interfered with” this would fall within the basic terms of [business interruption] cover.


The Court determined that insurers were on risk in this case. We do not know what the legal costs associated with this determination were but they would no doubt have been very substantial.

Remember too that the Court at this stage was still only dealing with general principles rather than the particular quantum (i.e. value) of Ted Baker’s actual recovery under the Axa policy. As ever, clarity in policy drafting terms should be seen as a valuable commodity.

About Francis Kean

Francis is an Executive Director in Willis Towers Watson's FINEX Global, where he specializes in insurance for Dir…
Categories: Directors & Officers

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