Hunton Insurance Recovery Blog

A recent securities class action, Dunn v. Upstart Holdings, Inc., brought against Upstart – a fintech lender – underscores emerging AI-related D&O risks. Filed April 2026 in California federal court, the suit alleges that Upstart and its executives misled investors about the performance of its AI loan underwriting model. When Upstart’s AI Model 22 underperformed, the company’s stock plunged, prompting an investor lawsuit claiming that management knew about calibration failures. The case spotlights the D&O insurance implications of artificial intelligence in corporate operations. Company executives face new exposures if AI algorithms malfunction or produce biased outcomes. For policyholders, D&O policies may provide coverage for defense and, possibly, liability in securities suits alleging misrepresentations about AI systems. Insurers, however, are starting to add AI exclusions or sublimits, wary of the unpredictable liability posed by opaque AI models.

In the case of County of San Bernardino v. Insurance Company of the State of Pennsylvania, the Ninth Circuit recently addressed the issue of whether general liability policies issued in the 1960s and 1970s included aggregate limits for claims arising under the premises-operations coverage in CGL policies. The difference between the policyholder’s interpretation of the policies’ limits clauses and the insurer’s interpretation was worth hundreds of millions of dollars in exposure for the insurer. The Court closely examined the policy language and extrinsic evidence from both the insurance industry’s drafting history and the parties before concluding that the policies were ambiguous. The Court construed that ambiguity in favor of the policyholder and ruled that aggregate limits did not apply to the claims at issue. The Court’s decision underscores the importance of carefully examining a policy’s limits, especially for older policies written before 1986 when the insurance industry revised the standard-form CGL policy to state the aggregate limits apply not only to products liability claims but to premises-operations claims as well. Decades of insurance industry drafting history confirms, as the policyholder’s submissions in this case indicate, that the industry well understood that operations claims like the environmental waste-disposal claims at issue here typically were not subject to aggregate limits. 

We are pleased to announce that Kevin V. Small, Partner in the firm’s Insurance Coverage practice, has been appointed to the Board of Directors of the RIMS New York Chapter for the 2026 term, serving as a Director.

The last year has seen a resurgence of special purpose acquisition companies or “SPACs.” Whether this SPAC comeback will persist remains to be seen. But sponsors, targets, investors, and other market participants should take heed of significant directors and officers liability insurance rulings arising from the SPAC heyday of the early 2020s that have now made their way through the courts and provide useful guidance to those looking to place and rely upon effective D&O insurance solutions. 

A recent summary judgment order is a reminder that, in insurance coverage disputes, straightforward arguments can still win the day. In a coverage action arising from dozens of underlying personal injury suits, the court adopted a clear, text-based approach to the duty to defend—and ordered the insurer to provide a defense.

The ongoing military action between the U.S., Israel, and Iran is affecting commerce both in the region and globally. There have already been reports of several oil tankers, cargo vessels, and a data center being damaged in attacks. Even businesses not directly impacted will be affected as shipping companies avoid the Strait of Hormuz, causing delays and higher prices for downstream customers. While many might assume insurance coverage is unavailable, that is not always the case and knowing where to look is key.

In the case The Estate of Gene B. Lokken v. UnitedHealth Group, Inc., No. 23-CV-3514 (JRT/SGE) (D. Minn.), the plaintiffs alleged that the defendant insurer had denied claims using an artificial intelligence program without human review. They sought discovery into the insurer’s use of AI. When the insurer refused, they moved to compel and the Minnesota federal court granted the motion. Although this case deals with health insurance, its principles are widely applicable to all other types of insurance. Insurers are increasingly using AI to evaluate or even deny claims without human review. They also use it to challenge policyholders’ expenses as too high. Courts are beginning to allow discovery into how AI was used in the claim process. Accordingly, requests for AI chat files, use policies, and documents concerning oversight of AI should now be a standard part of every policyholder’s discovery requests in coverage litigation.

As conference and national tournaments approach for various sports, college athletics are entering a financially volatile stretch of the year. Individual investors and NIL collectives are preparing to make significant investments to build next year’s rosters and secure talent from transfer portals. With those investments, however, comes a substantial risk of loss. The risk of athlete injury looms larger than most. A season‑ending injury can derail not only a team’s performance, but also the financial expectations tied to an injured athlete. That uncertainty can, in turn, discourage future NIL investments. Booster insurance has emerged as a tailored solution to address this exact risk.

Colleges and universities have long sat at the crossroads of freedom of expression and societal change. As campus activism surges, they face growing pressure to protect their institutional missions while upholding students’ individual rights in an era of heightened scrutiny.

Higher education institutions are navigating an increasingly complex and high-visibility risk landscape. Today’s colleges and universities are not only centers of academic inquiry—they are also large employers, property owners, event venues, research enterprises, and, at times, the epicenter of national social and political debate. As a result, campus issues that might once have been handled internally by college or university leadership can now escalate quickly into litigation, regulatory scrutiny, reputational harm, and significant insurance claims. The stakes are high.