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ARTICLE · 01 JULY 2026

No Coverage For Employment Lawsuit Related To Pre-Policy Demand

A federal court in New York ruled that an employment practices liability insurer had no duty to indemnify its policyholder for a lawsuit stemming from a whistleblowing claim, finding that the initial written demand preceded the policy period. The decision also addressed whether insurers must demonstrate prejudice when denying coverage based on late notice, ultimately holding that a twenty-month delay in notification would constitute prejudice even if such a showing were required.

United StatesInsurance

The United States District Court for the Southern District of New York, applying New York law, has held that an insurer had no duty to indemnify the insured for a lawsuit that was related to a demand made before the policy period. UDG Mgmt., LLC v. Ironshore Indem. Corp., 2026 WL 836684 (S.D.N.Y. Mar. 26, 2026). The court further held that even if the claims were made during the policy period, prejudice was not required to disclaim coverage, and the insurer was prejudiced regardless.

In September 2017, a former independent contractor made a written demand against the insured, alleging wrongful termination due to retaliation for whistleblowing. Then, in November 2017, the independent contractor filed a demand for mediation, with such mediation taking place in February 2018. After the matter did not settle, the independent contractor filed an arbitration demand in May 2018 before filing a lawsuit in April 2019.

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