Business Auto

Insurance Coverage Q&A: Stolen Credit Card and False Pretenses

When you sell a vehicle to a person using a stolen credit card and the transaction is reversed, does False Pretense Coverage apply?

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Our insured sold a vehicle to a customer who used a credit card. The credit card was later determined to be stolen so the bank reversed the transaction. It is my position that this is exactly what the attached endorsement (CA 25 03 False Pretense Coverage) is meant to cover. The carrier is suggesting that it is not covered because: b.(s) states false pretense coverage does not apply to a loss which, for any reason, a bank or other drawee fails to pay. The proximate cause of this loss is the false pretense. Would you agree with the carrier?

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Kelly Helton, JD

 

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