USA – NORTH CAROLINA Trends and Developments Contributed by: Dan Strong, Teague Campbell Dennis & Gorham LLP
• data breach response expenses; • privacy-related exposures; and • third-party liability claims arising from cybersecurity events. These claims present coverage questions that often require both close policy interpretation and technical factual analysis. Cyber-related claims often involve substantial losses, complex causation issues, and significant investiga- tions. Unlike traditional property losses, cyber claims may implicate multiple categories of damages simul- taneously. Questions regarding business interruption, expenses incurred in responding to security incidents, third-party liabilities, and policy interpretation fre- quently arise within the same claim. As these disputes continue to grow, insurers should expect increased litigation surrounding cyber-specific policy language and coverage triggers. Trend four: receiverships are creating new avenues for pursuing bad-faith claims Another developing issue that insurers and cover- age counsel should monitor is the increasing use of receiverships as a mechanism for pursuing insurance- related causes of action, including bad-faith and unfair claims practices claims. Historically, insurers often viewed disputes with insureds as limited to policy benefits and traditional coverage litigation. Increasingly, however, plaintiffs and judgment creditors are exploring alternative meth- ods to pursue insurer-related claims following signifi- cant verdicts, judgments, or insolvency events. One such mechanism is the appointment of a receiver to investigate and prosecute claims that may belong to an insured or an insured entity. See Haarhuis v Cheek , 820 S.E.2d 844 (N.C. App. 2018). In a receivership setting, a court-appointed receiver may be authorised to marshal assets and pursue claims belonging to the receivership estate. Depend- ing on the circumstances and the scope of the receiv- ership order, those claims may include causes of action arising from an insurer’s handling of coverage, settlement opportunities, defence obligations, or other aspects of the insurer-insured relationship.
As a practical matter, receivers often have incen- tives that differ from those of the original insured. A receiver’s obligation is to maximise recovery for the benefit of creditors and other interested parties. As a result, receivers may aggressively investigate potential claims against insurers and challenge coverage posi- tions or claims-handling conduct that previously went unchallenged. The growing use of receiverships creates several prac- tical considerations for insurers and defence counsel. First, insurers should anticipate increased scrutiny of claim files, coverage analyses, reservation-of-rights letters, and settlement communications when a receiver becomes involved. Second, disputes that initially appear to concern only contractual coverage issues may evolve into broader allegations involving bad faith, unfair claims practices, or alleged failures to settle within applicable limits. Third, receivers may pursue claims that an insured previously declined to assert, creating additional litigation exposure years after the underlying coverage dispute arose. Although receivership-driven insurance litigation remains less common than traditional coverage and bad-faith disputes, it represents a potentially sig- nificant source of future exposure. As policyholders, creditors, and plaintiffs continue to explore creative recovery avenues following large losses and judg- ments, insurers should expect increased attention to whether receivers can pursue claims relating to cover- age decisions, defence obligations, settlement oppor- tunities, and alleged bad-faith conduct. Trend five: out-of-state bad-faith tactics are increasingly appearing in North Carolina claims In addition to the rise of traditional bad-faith and UDT- PA allegations, North Carolina insurers are increas- ingly encountering litigation and claims-handling tac- tics imported from jurisdictions that historically have been more receptive to expanded bad-faith theories. Plaintiffs’ counsel with multi-state practices, national referral relationships, or experience in plaintiff-friendly bad-faith jurisdictions are increasingly utilising strate- gies that are not traditionally recognised or commonly employed in North Carolina insurance litigation. While the legal viability of many of these tactics remains uncertain under North Carolina law, their growing use
351 I NSURANCE L I T IGATI O N 2026
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