USA – NEW YORK Trends and Developments Contributed by: Ian Boczko and Sunny S. Jeon, Wachtell, Lipton, Rosen & Katz
a breach-of-contract claim where the alleged miscon- duct extends beyond the denial of coverage itself. The decision reinforces that, under New York law, insurers may be held liable for extra-contractual dam- ages by failing to exercise good faith when investigat- ing claims and making coverage determinations. Complex Commercial Division’s Broadened Authority Over Complex Commercial Insurance Coverage Disputes Effective 3 November 2025, amendments to the New York Complex Commercial Division rules clarify that additional categories of complex insurance coverage disputes clearly fall within the Commercial Division’s jurisdiction. See 22 N.Y.C.R.R. §§ 202.70 (b), (c). The amendments expressly encompass many commer- cial coverage controversies, including coverage under policies insuring directors and officers, errors or omis- sions (E&O), cyber, business interruption, as well as other sophisticated commercial insurance disputes. The rules also broaden the court’s ability to hear envi- ronmental and mass-tort coverage cases and elimi- nate the prior exclusion applicable to first-party insur- ance claims. Taken together, the amendments reflect a policy judgement that complex insurance disputes increas- ingly belong in New York’s specialised business court. The changes, which align with the approach of several other jurisdictions, should increase the number of sig- nificant coverage actions litigated before judges with substantial experience handling complex commercial matters. New York policyholders and insurers should expect a growing number of major coverage disputes to be heard in the Commercial Division, where litigants may benefit from more specialised judicial management and a developing body of commercial insurance prec- edent. Delaware Supreme Court Narrows the Reach of D&O Bump-Up Exclusions New York courts frequently look to Delaware courts for guidance on corporate law issues, particularly where Delaware law is more extensive. See, eg, In re Tops Holding II Corp ., 646 B.R. 617, 692 n.361
(Bankr. S.D.N.Y. 2022) (“Where New York law is not as robust as Delaware law regarding matters of fiduci- ary duties, New York courts have looked to Delaware law for guidance”.); In re Perry H . Koplik & Sons , Inc ., 476 B.R. 746, 796 (Bankr. S.D.N.Y. 2012) (noting that courts addressing D&O duties “have often looked for guidance” to Delaware law, where “the thinking in this area has evolved”), adopted in part, 499 B.R. 276 (S.D.N.Y. 2013), aff’d, 567 F. App’x 43 (2d Cir. 2014). New York courts “have looked to Delaware courts for guidance” on insurance-related issues, such as “indemnification and advancement”, which “Delaware courts have often addressed”. Suk Joon Ryu v Hope Bancorp , Inc ., 2018 WL 1989591, at *8 n.5 (S.D.N.Y. Apr. 26, 2018); see also Ficus Invs ., Inc . v Priv Cap . Mgmt ., LLC , 61 A.D.3d 1, 9 (1st Dep’t 2009) (“Dela- ware courts have had ample opportunity to address these issues of indemnification for and advancement of expenses and, although not binding as to… New York law, their holdings can be instructive”). Against that backdrop, and taking note of the fact that New York courts have not independently addressed similar issues, the Delaware Supreme Court’s decision in Illinois National Insurance Co . v Harman Interna- tional Industries , Inc., 2026 WL 204209 (Del. Jan. 27, 2026) represents one of the most significant D&O cov- erage decisions of the past year. In Harman , a class of Harman shareholders sued after Harman’s 2017 acquisition under the federal securities laws, alleg- ing that the proxy contained misleading disclosures. After the case settled years later, Harman’s D&O insur- ers denied coverage under the policy’s “bump-up” exclusion, which barred settlement coverage if (i) the claim underlying the settlement alleged inadequate deal consideration for an acquisition, and (ii) the set- tlement amount represented an effective increase in deal consideration. Although the court agreed with the insurers that the underlying securities complaint alleged inadequate deal consideration in an acquisition because it plead- ed that the proxy statement’s disclosures deprived investors of the “true value” of their shares, the court concluded that the insurers failed to establish that the settlement functioned as an effective increase in merger consideration – a separate requirement under the applicable bump-up exclusion.
346 I NSURANCE L I T IGATI O N 2026
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