Dentist’s wife embezzles from husband; employee dishonesty insurance will not cover steal of $325K because she wasn’t an employee

Dentist's Wife Embezzles

It gets interesting when a dentist’s wife embezzles. The insured in Chancey v. Cincinnati Insurance Co. was a dentist who had “married the wrong woman.”

Dentist’s Wife Embezzles

Dr. Chancey’s wife managed his dental office, but in the course of running that office, she ran up over $300,000 of credit-card debt and stole over $25,000 from his dental practice. The two divorced, and Dr. Chancey later sought coverage for his wife’s misdeeds under a bond that covered loss resulting from employee dishonesty.

The insurer denied coverage because his wife was not an “employee.” A federal district court in Alabama agreed with the insurer. The bond defined employee as a “natural person [w]hom you compensate directly by salary, sages or commissions,” but the record was clear that the wife had never received a salary, wages, or commissions for her work at the dental practice. The court entered summary judgment in favor of the insurer.

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