Hunton Insurance Recovery Blog

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.

The Northern District of California recently rejected an insurer’s attempt at avoiding its duty to defend the insured based on erroneous application of a prior knowledge exclusion. The case highlights the breadth of an insurer’s duty to defend and reiterates that to avoid this duty, “it is the insurer’s burden to demonstrate there is no possible theory that would bring a single issue within coverage.”

The North Carolina business court recently handed a win to policyholders in a COVID-19 business interruption lawsuit arising from the pandemic-related closure of Tanger outlet centers across the country. Tanger Props. Ltd. P’ship v. ACE Am. Ins. Co., 2025 NCBC 66 (Oct. 27, 2025). Tanger’s insurers moved to dismiss the lawsuit on the basis that the insurance policies are governed by Georgia law, not North Carolina law, where the Supreme Court has held that all-risk policies must cover loss resulting from COVID-19 interruptions. Unpersuaded by the insurers, the court denied the motion finding that Tanger established a sufficiently close connection to North Carolina law.

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.