Article ID: 15a201119ad5e0bf88d2ba1a3b580d2e82e59809ff91fd13082d2cc5857ef362
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URL: https://www.businessinsurance.com/insurers-must-cover-silicon-valley-banks-loss-in-loan-fraud/
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Insurers must cover Silicon Valley Bank’s loss in loan fraud - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2026 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2026 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2026 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2026 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Insurers must cover Silicon Valley Bank’s loss in loan fraud by Richard Sine Claims Disputes , P/C Insurers Chubb , W.R. Berkley Oct 2, 2026 A federal judge rejected an argument by units of Chubb and W. R. Berkley that an electronic document didn’t count as an “original” in requiring the insurers to cover Silicon Valley Bank’s losses on a $150 million credit line obtained with forged documents. In SVB Financial Group v. Federal Insurance Company , a judge in U.S. District Court for the Eastern District of North Carolina on Wednesday granted summary judgment to the Federal Deposit Insurance Corporation, which is acting as receiver for the failed bank. Elliot Smerling used fake partnership and subscription agreements to obtain the credit line for his private equity fund, according to the ruling. The bank funded about $95 million in 2021. Mr. Smerling was arrested weeks later on fraud charges, in part related to Silicon Valley Bank, pleaded guilty and received a 97-month prison sentence, the ruling said. The bank says it lost more than $70 million. Federal bond has a $15 million single-loss limit. Berkley Regional’s bond sits above it for another $15 million. Both insurers denied the claim in 2022. The insurers argued that the bank never held “original” documents because it received PDFs by email, and therefore never had “actual physical possession” of them. The judge disagreed. The bond doesn’t define “original,” he wrote, and a dispute over unclear wording is resolved in favor of the policyholder. “Electronic and electronically-transmitted documents can constitute originals” when they serve as source documents for loan transactions, he found. The judge also found that the forged agreements qualify as covered “guarantees” and “security agreements,” that forgery was the only cause of the loss and that the bank acted in good faith. 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