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A key requirement under many fidelity bonds is that an
insured's loss "result directly from" employee
dishonesty or other covered peril. The majority of US courts have
adopted the "direct means direct" approach, holding that
the language calls for a causation standard more stringent than
proximate cause. The minority view is that only proximate cause is
required. The Canadian courts have come at the question from a
different angle.
A recent decision by the US Circuit Court of Appeals for the
Sixth Circuit illustrates the evolving nature of the issue within
the US and, in particular, the Sixth Circuit.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.