Hunton Insurance Recovery Blog

On November 4, 2025, the Supreme Court of Nevada denied a petition for a writ of mandamus filed by insurers seeking to challenge denial of their partial summary judgment motion on the issue of whether Covid-19 may cause “direct physical loss, damage or destruction” of property under an all-risk insurance policy that includes affirmative coverage for loss caused by infectious disease.

Third-party funding of high-stakes litigation can often make the difference between litigating the case or walking away.  The financial arrangement often makes good sense, with investors helping to facilitate the pursuit of bona fide claims that might otherwise be forgone in exchange for a piece of the recovery.  Insurance coverage disputes fit this model well, since those claims typically involve an insured who has already suffered some financial or other hardship and an insurance company with deep resources that refuses to pay the claim.  It should come as little surprise, therefore, that the Insurance Services Office (ISO), an advisory and rating organization for the property/casualty insurance industry, recently approved a new endorsement that requires disclosure of third-party litigation funding agreements. The approval comes as courts and state legislatures step up demands for transparency in funding to curtail influence that funders may have over litigation strategy.

Captive insurers are formed with careful attention to domicile to select for favorable tax, regulatory, and operational climate. But as a recent decision reminds us, jurisdictional exposure doesn’t end with the state or country of incorporation. Captive insurers, like any other entity, can find themselves subject to litigation in jurisdictions where their conduct has an effect. Understanding this reach is essential to managing risk from an insurance and corporate governance perspective.

A self-insured retention is a dollar amount specified in the insurance policy that an insured must pay toward a claim before insurance coverage begins to apply to pay for remaining covered amounts. While ordinarily straightforward, insurers may sometimes argue otherwise. In a recent summary judgment ruling in The Archdiocese of New York, et al. v. Century Indem. Company, et al., No. 652825/2023 (N.Y. Sup. Ct. Sept. 8, 2025), based on the plain language of the insurance policies, a New York state trial court rejected an insurer attempt to treat a self-insured retention as reducing the amount covered under the policies. 

Benchmark Litigation has recognized the following members of Hunton’s insurance coverage team as Litigation Stars: practice head Syed S. Ahmad, partner Walter J. Andrews, and special counsel Lorelie (Lorie) S. Masters. Benchmark’s Litigation Star recognizes individuals who possess a strong case record and are consistently recommended by clients and peers as reputable and effective litigators.

In addition, Benchmark named partner Geoffrey Fehling on its Future Stars list, which recognizes individuals who are consistently referenced by peers and clients as litigators who are building their reputations in the market.

Even Real Housewives need insurance. Real Housewives of Potomac star Wendy Osefo, and her husband Edward, were recently indicted on charges of insurance fraud, among other charges. The housewife’s predicament is a cautionary tale for those with commercial and personal lines of coverage about the investigative tools insurers may use to investigate a suspicious or large insurance claim. In insurance, as in life, honesty is the best “policy.”

A New Mexico Court of Appeals decision illustrates that when a policy term is undefined and ambiguous, the term must be interpreted liberally and in favor of coverage. In Kane v. Syndicate 2623-623 Lloyd’s of London, 2025 WL 1733046 (N.M. Ct. App. June 16, 2025), the court affirmed summary judgment for a policyholder and held that a cyber liability policy afforded coverage for the policyholder’s loss that resulted from a post-breach fraudulent funds transfer because the preposition “for” was broad enough to afford coverage for a third party claim resulting from a security breach.

When a cyber incident occurs and the insurer pays out the claim, they often face the frustrating reality that pursuing the actual criminals – the threat actors – for indemnification is virtually impossible. Thus, insurers are now turning to subrogation claims against the very cybersecurity vendors entrusted by policyholders to protect their systems. Indeed, insurers are increasingly examining whether outsourced cybersecurity providers may have breached their contractual obligations or failed to deliver adequate protection, leading to the loss. This shift means policyholders may find their cybersecurity vendors facing legal action from their own insurer, creating a new layer of risk in vendor relationships.

The decision of when to sue insurance companies, especially excess insurers, can be difficult, especially in disputes involving multiple claims, long timelines, and conflicting coverage positions between insurers. A recent federal court in Delaware, General Cable Corp. v. Scottsdale Indemnity Co., No, 1:24-CV-00797-TMH, 2025 WL 2576384, (D. Del. Sept. 5, 2025) underscores the timing risks in pursuing recovery in and out of litigation. In a word of warning to Delaware policyholders, the court dismissed a lawsuit against a manufacturer’s directors and officers excess liability insurers because its claims were either not ripe for adjudication or untimely filed.

Earlier this month, the Southern District of New York issued an opinion in The Vale Fox Distillery LLC v. Central Mutual Insurance Company, No. 24-cv-4169 (S.D.N.Y.), which concerned a catastrophic collapse of storage racks holding whiskey barrels at Vale Fox’s distillery, destroying over $2.5 million worth of aging single malt whiskey. The court determined there was coverage for Vale Fox’s loss but left the issue of valuation to be determined another day.