Hunton Insurance Recovery Blog

In Illinois National Insurance Company v. Harman International Industries Incorporated, No. N22C-05-098 (Del. 2026), the Delaware Supreme Court affirmed D&O coverage for a $28 million settlement of a securities class action, finding the policies’ “bump-up” exclusion inapplicable to the settlement.

In a recent legal update, Hunton attorneys Steven Haas, Johnathon E. Schronce, Geoffrey B. Fehling, and Madalyn Moore discuss important takeaways from the Harman decision for policyholders who find themselves embroiled in M&A litigation. The decision underscores the continued relevance of bump-up exclusions, how those exclusions can lead to coverage disputes involving M&A litigation, and the importance of policyholders’ awareness of potential bump-up coverage issues when placing or renewing D&O coverage, pursuing transactions, and defending and settling deal-related claims.

If recent years have taught insurance practitioners anything, it is that the most consequential coverage disputes rarely turn on novelty alone. In 2025, courts continued to resolve high‑stakes insurance disputes by returning to first principles—examining when claims are related, how losses and occurrences are defined and aggregated, and how policy language allocates risk across time and conduct. D&O coverage and other core insurance law issues again occupied center stage, while decisions in property, cyber, and liability disputes reinforced a familiar theme: policy interpretation remains the decisive factor in determining whether coverage is available in an increasingly complex claims environment. As the decisions discussed below demonstrate, 2025 confirmed that even as risks evolve, coverage disputes remain grounded in careful, policy‑specific analysis.

A recent Ninth Circuit decision—Las Vegas Sands, LLC v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 2025 WL 3754348 (9th Cir. Dec. 29, 2025) —reversed a Nevada district court’s ruling in favor of a D&O insurer that had refused to cover a lawsuit asserting both contract and tort claims under the policy’s contractual liability exclusion. The ruling is a timely reminder for policyholders about why they should carefully scrutinize coverage denials, especially overbroad readings of contract exclusions, and consider pursuing insurers who wrongfully deny coverage.

Companies have long favored Delaware for business purposes for a multitude of reasons. One new reason to add to that list may be Delaware’s approach to coverage under directors and officers, errors and omissions, and other claims-made liability policies for costs incurred in responding to government investigations. Building upon prior pro-policyholder rulings, a Delaware court recently concluded that a DOJ civil investigative demand (CID) was a covered “Claim,” even where the policy expressly included other, more limited coverage targeting governmental investigation expenses.

Directors and officers liability insurance is first and foremost protection against personal exposure of boards and management who are targeted in claims challenging their decisions in running the company. That’s why it is surprising how often dedicated “Side A” coverage—insurance coverage, subject to no self-insured retention, available exclusively for the benefit of directors and officers who are not indemnified by the company—is overlooked in placing and renewing D&O insurance programs. One recent Texas bankruptcy ruling, In re First Brands Group, LLC, No. 25-90399 (CML) (Bankr. S.D. Tex. Jan. 7, 2026), demonstrates just how powerful Side A protection can be. There, against strong objections from the creditors’ committee, the bankruptcy court granted motions by numerous former executives seeking relief from the automatic stay to recover D&O insurance proceeds, unlocking millions in Side A coverage to defend against private and governmental claims asserted in connection with the bankruptcy.

As we ring in the New Year, one thing remains the same: understanding the definitions and conditions in your insurance policy is critical. In a recent decision, a Florida federal court in Ohio Security Insurance Co. v. E Kelly Enterprises Inc. et al., No. 3:22-cv-24754, held that an insurer had no duty to defend or indemnify a general contractor and no duty to indemnify a subcontractor for damages from defective work on a naval base, based on the policy’s definition of “suit,” “property damage,” and allocation requirements. The decision highlights the importance of numerous issues in the context of commercial general liability policies, including the nuances of policy definitions, obtaining insurer consent when necessary, and allocation between covered and uncovered claims.

While the holiday season brings joy to many, it can be a stressful time for businesses. Cyberattacks often spike during weekends and holidays when businesses are less vigilant and slower to detect unusual activity. This reduced oversight creates an opportunity for attackers to exploit weaknesses and cause significant disruption. A recent article in Tech Times noted that ransomware groups launch over 50% of their attacks during weekends and take advantage of December’s increased operational shortages.

In a recent opinion, the 8th Circuit rejected an insurer’s attempt to expand insurer victories in a COVID-19 context to other more traditional claims of property damage. Reaffirming long standing principles, the court held soot and water damage associated with a fire constituted “direct physical loss or damage” under a commercial property insurance policy.

North Carolina has once again favored policyholders seeking insurance coverage for COVID-19 business interruption losses. A recent decision from the Middle District of North Carolina in Durham Wood Fired Pizza Co. LLC v. Cincinnati Ins. Co., reinforces the North State Deli decision and suggests that a failure to provide coverage for COVID-19 business interruption claims may constitute bad faith.

From insurance agents and wholesalers to risk consultants and policyholders, there are many parties involved in commercial insurance transactions. While each has an important part to play, the policyholder-agent relationship is particularly important to ensure both sides understand their respective roles and obligations when an agent assists in obtaining coverage.