Hunton Insurance Recovery Blog

Policyholders facing “related” claim denials under D&O policies should take note of the recent Delaware Superior Court decision, Big V Capital LLC v. Great American Insurance Company (Del. Super. June 30, 2026), where the court held that a derivative action filed during a renewal policy period was covered—even though it was related to an earlier books-and-records action that the policyholder had not reported under the prior policy. The decision turned on the specific structure and wording of the policy at issue but reinforces core policyholder-friendly principles under Delaware law, including construing coverage broadly while refusing to deny claims absent a clear and specific exclusion.

Background

A minority member of a commercial real estate firm brought a books-and-records action, alleging suspected misuse of company assets by the firm’s member-manager. The company did not seek coverage or provide notice of the action to its D&O insurer, and the action later settled after the company produced records.

A few months later, after the company’s D&O policy had renewed, the same minority member filed a direct and derivative action against the company, related entities, and the member-manager. The complaint alleged fiduciary-duty breaches arising from the alleged diversion of company assets. The company noticed and sought coverage for the derivative action under the renewal policy.

The insurer denied the claim, contending that the derivative action was “interrelated” with the earlier books-and-records action and thus was deemed a single claim first made at the time of the original claim, outside the covered renewal policy period. The insurer also concluded that it was too late for the insureds to seek coverage under the earlier policy period.

The insureds sued the insurer in Delaware state court, seeking a declaration that coverage exists for the derivative action and damages for breach of the policy. After the parties filed competing dispositive motions, the key question was whether the renewal policy barred coverage for related matters that would otherwise be available under the insuring agreement covering claims first made during the renewal period.

The Court Rejects the Insurer’s Related-Claims Defense

The parties did not dispute that the books-and-records action and the derivative action were meaningfully linked and, therefore, involved related claims. But that was not enough to defeat coverage. As the court explained, whether related claims are deemed first made at the time of an earlier matter “for coverage purposes” depends on the policy language.

The insurer relied principally on a related-claim provision in the policy’s retention section. That provision stated that claims involving the same or interrelated wrongful acts would constitute a single claim and would be deemed made on the earliest date of either a related claim or notice of related wrongful acts. The insurer characterized this provision as a “deemer” clause that defined the “relevant timeline” for when claims are deemed made as a general matter.

The court disagreed and found the insurer’s interpretation to be unreasonable. The related-claim provision appeared in the policy’s retentions section and was expressly geared at relatedness in the context of retentions, allowing the policyholder to pay just one retention for several claims alleging interrelated wrongful acts. It did not exclude coverage for a claim first made during the policy period merely because it related to an earlier, unreported matter.

The policy also contained a “related claims” exclusion. That exclusion barred coverage for claims involving wrongful acts or interrelated wrongful acts but only when those acts had been the subject of an earlier notice or claim under a prior policy. Because the earlier books-and-records action had not been reported, the exclusion did not apply.

Accepting the insurer’s broad reading of the retention provision, the court explained, would render the related-claims exclusion meaningless by barring coverage for all prior related matters, reported or unreported. The insurer therefore had not shown that the otherwise-covered derivative action was specifically excluded.

Takeaways

This decision provides several useful lessons for policyholders:

• Relatedness alone does not necessarily determine when a claim is deemed made for coverage purposes. The specific policy language controls, and insurer denials must be tested against the actual policy wording.
• A claims-made policy may distinguish between related claims that were previously reported and related claims that were not. That distinction may be the difference between coverage and a denial.
• Insurers should be held to a high burden to eliminate coverage, even if the provision is not labeled an “exclusion.” The Big V Capital court rejected the insurer’s contention that the retention provision was not being used as an exclusion. Following settled Delaware Supreme Court law, the court endorsed the idea that “a provision is an exclusion if it has an ‘exclusionary effect,’ regardless of where it is found in the policy.”
• Not all insurers or policy forms are created equal. Updated versions or new endorsements can also shift coverage, even without changing insurers. The insurer in Big V Capital may have assumed its related-claim provisions worked together to avoid potential gaps based on whether a claim is reported but did not clearly construct its policy to achieve that goal. Other D&O policies, in contrast, contain standalone related-claims provisions that expressly deem related claims to have been made when the earliest related claim was made and exclude claims first made before the policy period.

Related-claims disputes are inherently fact, policy, and jurisdiction-specific. Aside from the variations in common law standards for “interrelatedness,” material differences in policy language and structure can shift related claims in or out of coverage depending on the specific facts of the claim. Here, because the earlier books-and-records action was not reported, the prior-notice-based related-claims exclusion did not apply, leaving coverage available for the later derivative action.