American International Group Inc. was sued today by two California residents who allege their homeowner insurance policies entitled them to coverage on losses from Bernard Madoff’s Ponzi scheme. Reuters reports that the putative class action was filed by Robert and Harlene Horowitz, who claim to have lost $8.5 million in the Madoff scandal. The Horowitzes alleged that AIG refused to honor AIG Fraud SafeGuard coverage in policies they obtained from subsidiaries of the insurer, even though the coverage insures against losses resulting “directly from fraud, embezzlement, or forgery.”
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