A frequently recurring coverage issue litigated in Delaware courts is the treatment of related claims and the consequences that flow from a determination that multiple proceedings are related. A recent Delaware Superior Court decision revisits those issues, this time in a dispute involving an insurer’s reliance on related-claims language in a policy retention provision to deny coverage for a derivative action.
While Delaware courts have recognized that related claims may be deemed first made at the time of an earlier proceeding, they have also emphasized that the consequences of that relationship depend on the policy language at issue. In its June 30, 2026, decision, the Delaware Superior Court rejected an insurer’s argument that a derivative action filed during the policy period related back to an earlier books-and-records proceeding, holding that the policy’s retention provision did not operate as a coverage exclusion.
As discussed below, the court’s ruling offers an interesting look at how Delaware courts might analyze related-claims issues and considerations for private company D&O underwriters.
A copy of the court’s June 30, 2026, opinion can be found here. Our thanks to Geoffrey Fehling for calling our attention to the decision in his LinkedIn post here.
Relevant Policy Language
The Delaware coverage dispute centered on the following language in the management liability policy’s retention provision:
“More than one Claim involving the same Wrongful Act or Interrelated Wrongful Acts of one or more Insureds shall be considered a single Claim, and only one Retention shall be applicable to such single Claim. All such Claims constituting a single Claim shall be deemed to have been made on the earlier of the following dates: (1) the earliest date on which any such Claim was first made; or (2) the earliest date on which any such Wrongful Act or Interrelated Wrongful Acts was reported under this Policy or any other policy providing similar coverage.”
The policy also included a related-claims exclusion precluding coverage for claims arising from wrongful acts or interrelated wrongful acts that “have been the subject of any notice or Claim given under any other policy of which this Policy is a renewal or replacement.”
The Big V Coverage Decision
On July 8, 2025, Big V Capital and related entities (Big V) filed their coverage action in Delaware Superior Court arising out of a dispute over whether the related-claims provisions in Big V’s private company management liability policy barred coverage for a derivative action.
According to the allegations in Big V’s coverage complaint, a minority member filed a books-and-records action against the company on January 10, 2024. Big V did not report the books-and-records proceeding to its management liability insurer, and the policy was subsequently renewed with the same carrier. On May 13, 2024, the same claimant filed a derivative action alleging that Big V’s member-manager had breached his fiduciary duties through the misuse of company assets. Big V then reported the derivative action and sought coverage under its renewal policy.
The complaint alleges that the insurer denied coverage based on the policy’s related-claims language. Specifically, the insurer relied on the retention provision (cited above) stating that multiple claims involving the same or “Interrelated Wrongful Acts” are to be treated as a single claim and that all such claims “shall be deemed to have been made” on the date the earliest related claim was made.
According to the insurer, the derivative action and the earlier books-and-records proceeding involved “Interrelated Wrongful Acts” and therefore constituted a single claim. Because the books-and-records action was filed on January 10, 2024, before the March 1, 2024, inception of the renewal policy, the insurer argued that the derivative action likewise was deemed first made before the renewal policy period and was not covered. The insurer further contended that because the books-and-records proceeding was not reported during the prior policy period, coverage was unavailable under that policy as well.
Big V did not dispute that the books-and-records action and derivative action were related. Rather, it argued that the policy drew a distinction between related claims generally and previously reported related claims. The policy’s related-claims exclusion applied only where the earlier matter had been the subject of a notice or claim under a prior policy. Because the books-and-records proceeding had never been reported, Big V contended that the exclusion did not apply. The insurer argued that the retention provision’s related-claims language deemed the derivative action first made upon filing of the books-and-records action, thereby placing the claim outside the renewal policy period and barring coverage.
In its June 30, 2026, opinion, the Delaware Superior Court agreed with Big V. The court acknowledged that the books-and-records action and derivative action were related but held that the policy’s retention provision did not operate as a coverage exclusion. The court further concluded that the insurer’s interpretation would effectively rewrite the policy’s separately drafted related-claims exclusion by extending it to unreported claims. Because the earlier books-and-records proceeding had never been reported and the policy did not otherwise exclude coverage, the court granted summary judgment in Big V’s favor.
Discussion
The Big V decision is the latest in a series of Delaware coverage cases examining related-claims provisions. As we have previously noted, disputes involving related claims often focus on whether multiple proceedings are sufficiently connected to be treated as a single claim and, if so, what effect that determination has under the policy.
What made the Big V coverage dispute noteworthy was not whether the books-and-records action and derivative action were related, a point the parties did not dispute, but the consequences of that relationship under the policy. The insurer argued that the retention provision’s related-claims language, which deemed related claims first made when the earliest related claim was made, rendered the derivative action first made upon filing of the books-and-records action, placing it outside the renewal policy period. Big V contended that the policy’s separate related-claims exclusion applied only when the earlier matter had been reported under a prior policy.
The Delaware Superior Court sided with Big V. It held that the retention provision governed retention obligations, not coverage, and rejected the insurer’s attempt to use that provision to expand the scope of the policy’s related-claims exclusion. Because the exclusion applied only when the earlier matter had been reported under a prior policy, and the books-and-records action had never been reported, the court concluded that no policy provision barred coverage for the derivative action.
The court’s decision may have important implications for the underwriting of private company D&O and management liability risks. Under the insurer’s interpretation of its policy, there would have been no coverage under either policy period because the earlier books-and-records proceeding was related to the later derivative action but had never been reported. However, the court rejected that reading and concluded that the policy’s retention provision could not be used to broaden the effect of the related-claims exclusion.
For private company D&O underwriters, the Big V decision highlights the importance of evaluating how related-claims provisions interact with notice requirements and related-claims exclusions. Underwriters may wish to consider whether their policy language clearly addresses the treatment of unreported prior matters and whether the policy’s related-claims framework produces the intended result when claims span multiple policy periods.
Ultimately, the Big V decision demonstrates that the key issue in many related-claims disputes is not whether two proceedings are related, but the consequences that the policy assigns to that relationship.
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