PART 1: Representations & Warranties Insurance in Today’s Deal Market: Why It Matters More Than Ever

Introduction

Representations and warranties insurance (“RWI”) has rapidly evolved from a niche product used in select transactions to a near-standard feature in middle-market private equity deals. What was once viewed as an optional risk-transfer tool is now often a central component of deal structuring—influencing everything from bid competitiveness to post-closing risk allocation.

Continue Reading RWI in Practice: A 7-Part Series for Deal Professionals

Employers nationwide are experiencing a new wave of ERISA litigation targeting so-called “tobacco surcharges” on employees enrolled in employer-sponsored health plans. Because these lawsuits are generally brought as putative class actions, the stakes can be significant and some multi-million dollar settlements have already become public. But employers need not face the costs of defending and resolving these ERISA cases alone. Fiduciary liability insurance policies generally require insurers to pay for defense costs incurred in ERISA class actions and, depending on their terms and conditions, fiduciary liability policies may cover most, if not all, of any eventual settlements or judgments. Employers should carefully review reservation of rights letters and resist efforts by fiduciary liability insurers to improperly resist or limit coverage for tobacco surcharge litigation.

Continue Reading Maximizing Insurance Coverage for Emerging ‘Tobacco Surcharge’ ERISA Litigation

The insurance industry has been swift to adopt artificial intelligence (“AI”). According to consulting firm McKinsey & Company, 76% of insurers surveyed have already begun using generative AI in their day-to-day operations. [1] This adoption spans the different facets of insurers’ work cycles, including claims, underwriting, legal, and risk management. Policyholders and their attorneys must remain aware of the potential pitfalls of AI implementation, particularly as it pertains to claims management.

Continue Reading Insurance Industry’s Use of AI: A Fair or Unfair Claim Settlement Practice?

A New Risk Landscape for AI Infrastructure

Escalating tensions involving Iran—including maritime incidents affecting oil transport and alleged cyber and physical targeting of digital infrastructure in the Middle East—highlight a growing and underappreciated risk for AI-driven data centers: disruption that originates far beyond the insured’s own operations.  These developments are not occurring in a vacuum.  They come at a time when hyperscale data center expansion has become a central driver of economic growth in the United States, as well as a national security priority, underpinning everything from cloud computing to artificial intelligence development.

Continue Reading When Geopolitic Events Disrupt the Cloud: Insurance Coverage for Data Center Supply Chain Losses in a New Era of Conflict

On January 27, 2026, the Delaware Supreme Court issued a significant pro-policyholder decision affirming that directors and officers (“D&O”) insurers must cover a $28 million settlement paid by Harman International Industries Inc., to resolve stockholder litigation arising from its multi-billion dollar sale to Samsung Electronics Co., Ltd. The Court affirmed the Superior Court’s ruling that the applicable D&O policy’s Bump-Up Provision did not exclude coverage for the settlement, rejecting the insurers’ arguments that the payment effectively increased the merger consideration and was therefore barred under the policy.

The Court’s analysis centered on the specific structure of the Bump-Up Provision, which excluded coverage when (1) an underlying claim alleged that the acquisition consideration was inadequate, and (2) a settlement payment represented an effective increase in that consideration. While the Supreme Court agreed that the securities claims satisfied the first requirement, it held that the insurers failed to prove the $28 million settlement functioned as an effective increase in deal consideration. This rendered the Bump-Up Provision inapplicable as a bar to coverage.

In evaluating whether the settlement represented an “effective increase” in consideration, the Supreme Court examined the settlement terms, class of recipients, timing, and nature of the payment. The Court made clear that compensatory payments tied to alleged legal harm do not automatically equate to a repricing of a transaction. The coverage analysis therefore depends on the policy’s wording and the real-world effect of the payment, not simply the transactional setting.

For policyholders facing post-closing stockholder suits and other M&A-related disputes, the Harman decision confirms that D&O coverage may be available where a bump-up exclusion requires proof that a settlement represents an effective increase in consideration and the insurers cannot meet their burden to make that showing. Settlements are not excluded merely because they arise from a transaction.  Courts will require a clear alignment between the exclusion’s wording and the loss at issue, rather than relying on broad insurer characterizations of the loss. 

The Harman decision also underscores how subtle drafting differences in the policy language, such as how the terms “representing,” “effectively,” or “consideration” are framed, can impact or determine the outcome of a coverage dispute. This serves as a timely reminder of the importance of reviewing and negotiating corporate insurance policies at renewal, including a company’s D&O policy—a core fundamental coverage for most all public and private companies and their individual directors and officers. The Harman decision reflects the reality that a number of policy provisions in D&O policies can vary widely, and small wording changes can have substantial consequences. With slightly different language in the Bump-Up Provision in Harman, the result here (millions of dollars in insurance coverage) could have been different, underscoring the value of policy reviews by counsel before renewing your policies and after a claim arises without accepting insurers’ often inaccurate interpretations at face value.

Representations and warranties insurance (RWI) has become a fixture in today’s M&A landscape, offering buyers and sellers a mechanism to shift risk and streamline negotiations. Yet, as the RWI market matures, certain recurring disputes highlight the friction between deal economics, coverage intent, and post-closing realities. One common dispute arises when a pre-closing breach continues after the Closing date, raising the thorny question: when does loss stem from a covered pre-closing breach, and when is it attributable to post-closing conduct that falls outside the policy?

Continue Reading The Breach That Won’t Die: Navigating Post-Closing Conduct and RWI Coverage Disputes

Government and Federal Aviation Administration (FAA) safety directives have led to a reduction in flights beginning November 7, 2025, to protect people and property from potential accidents. The FAA’s Emergency Order Establishing Limitations on the Use of Navigable Airspace explains that the restrictions are necessary “to ensure the safety of aircraft” and “[t]o maintain the highest standards of safety” in the National Airspace System. For companies whose operations or revenues are affected, these measures may give rise to recoveries under general liability and property insurance policies.

Continue Reading Obtaining Insurance Recoveries From FAA-Mandated Flight Reductions

On October 20, 2025, the United States Court of Appeals for the Fifth Circuit issued a significant decision clarifying that an insurer’s duty to defend under Texas law extends to a contractually mandated alternative dispute resolution (ADR) proceeding.[i] The Fifth Circuit reversed a magistrate judge’s dismissal of BPX Production Co.’s (BPX) coverage claims, holding that an ADR proceeding triggers an insurer’s duty to defend and indemnify under a commercial general liability (CGL) policy—thus rejecting the insurer’s argument that a “suit” was required.  Further, the Fifth Circuit held that an insurer’s conduct can waive conditions to coverage. This decision provides important guidance for corporate policyholders navigating insurance disputes involving an ADR proceeding, policy defenses asserted by insurers, and the assignment of insurance rights to maximize an insurance recovery in the circumstance of a bankruptcy.

Continue Reading Fifth Circuit Issues Pro-Policyholder Ruling that ADR Proceeding Triggered Insurer’s Duty to Defend and Indemnify

Amazon’s recent announcement to invest at least $20 billion in cloud computing and AI data center campuses across Pennsylvania—a record‑breaking private investment in the Commonwealth—marks a turning point in digital infrastructure build-out.  Spanning sites in Luzerne and Bucks counties, the project promises 1,250 full‑time roles and thousands more in construction, while pairing with high‑demand energy sources like a nearby nuclear plant. The rapid expansion of AI data centers poses a unique set of risks—ranging from construction hazards to power and environmental challenges— and highlights the need those involved in these large infrastructure projects to close potential insurance coverage gaps and to explore alternative risk transfer solutions.

Continue Reading The New Frontier: Data Centers, AI & Insurance Implications

Last month, the New York Supreme Court issued a well-reasoned order denying the Archdiocese’s insurers’[1] motion to dismiss its claim against them for breach of the covenant of good faith and fair dealing, holding that the policyholder’s complaint sufficiently alleged its Insurers claim handling conduct amounted to bad faith.[2]  The Order is part of a new trend in New York that allows bad-faith claims to proceed when styled as claims for breach of the duty of good faith and fair dealing, where the conduct supporting the alleged bad-faith claim is independent of the alleged conduct giving rise to a breach of contract claim, and the policyholder sufficiently alleges damages arising from the bad-faith conduct. 

Continue Reading The Archdiocese Resurrects Faith in the New York Court System:  New York Supreme Court Issues Another Decision Allowing a New York Policyholder to Seek Damages for Bad-Faith Claim Handling