Court Rejects Bond Insurer’s Coverage Trigger Defense and Notice Prejudice Rule Arguments

In an interesting recent decision, a court rejected two defenses a Financial Institution Bond insurer asserted in denying coverage for a bank’s losses arising from a $3.6 million loan extended in reliance on documents that proved to have been forged. District Court of Arizona Judge G. Murray Snow, applying Arizona law, rejected the bond insurer’s arguments that the loss did not trigger one of the bond’s insuring agreements and that the notice prejudice rule did not apply to the bond’s coverage. The court’s January 4, 2019 decision can be found here. The Hunton Andrews Kurth law firm’s February 5, 2019 post about the decision on its Insurance Recovery Blog can be found here.   Background In 2012, Metro Bank loaned $3.6 million to Global Medical, in order for Global Medical to purchase two medical equipment companies, JCare Medical and A&A Medical. A condition of the loan was that Global Medical would not make any additional payments…

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