Hunton Insurance Recovery Blog

In the rarely litigated space of cyber insurance, the Northern District of Texas issued a win for cyber policyholders this week, offering a clear reminder to insurers that if they want to restrict coverage, they must draft the policy to clearly do so.

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.

On December 16, 2025, the Federal Trade Commission announced an enforcement action against Illusory Systems Inc., a Utah-based company doing business as Nomad, following a major data breach in which hackers stole $186 million from consumers.