Hunton Employment & Labor Perspectives

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.

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.

The recent Illinois federal court decision McDonald’s Corporation, et al., v. Homeland Insurance Company Of New York illustrates the perils that policyholders may face if they fail to understand the contours of key defined terms in their insurance policies. In McDonald’s, the court agreed that an insurer who sold a general liability policy did not have a duty to defend its insured against claims alleging fear and emotional distress because that harm did not meet the definition of bodily injury in the insurance policy.

It is common knowledge in the insurance industry that an insurer’s duty to defend is broad.  Recently, a U.S. District Court reminded us just how broad that duty is when it held that a complaint with only two scarce factual allegations triggered an insurer’s duty to defend.