The insured in Chancey v. Cincinnati Insurance Co. was a dentist who had “married the wrong woman.”
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.