A federal appeals court on Wednesday affirmed a lower court ruling in a title insurance company’s favor, holding the company had coverage under its crime policy in a case where a hacker stole almost $251,000 using a fraudulent routing number. 

Plano, Texas-based Valero Title Inc. had purchased a crime policy from RLI Insurance Co. that provided paying for losses resulting “directly from a fraudulent instruction” directing a financial institution to pay funds from Valero’s transfer account, according to the ruling by the 5th U.S. Circuit Court of Appeals in St. Louis in Valero Title Inc., doing business as Valero Title Co., v. RLI Insurance Co.

A fraudster posing as the lender’s employee sent a Valero employee wiring instructions with a fraudulent routing number, the ruling said. Because the employee did not recognize the instructions were fraudulent, she instructed Valero’s bank to wire $250,945.31, to the fraudster.

When Valero learned of the loss, it submitted a proof of loss claim to RLI, which determined it was not covered by the funds transfer fraud endorsement.

Valero filed suit against the insurer in U.S. District Court in Houston, which ruled in the title insurer’s favor. It was affirmed by a unanimous three-judge appeals court panel.

The panel ruled the district court correctly applied its interpretation of a policy clause and there is coverage when “a written instruction is forged or altered by someone other than the insured without the insured’s knowledge or consent prior to being issued by the insured.”

Valero attorney Mathew S.C. Hansel, a partner with Hanszen Laporte LLP in Houston, said in a statement, “Wire fraud has particularly plagued the title industry, and Valero purchased insurance to protect against that risk.

“Here, RLI attempted to hide behind a strained interpretation of its policy language to avoid the coverage owed to Valero Title. We appreciate that the 5th Circuit, like the District Court, has held RLI accountable for its obligations to our client. This is a good win for the little guy.”

RLI’s attorney did not respond to a request for comment.