In January 2026, a claim under a directors and officers’ policy by sports apparel and equipment company Under Armour for an additional $100 million coverage under the policy was rejected because the two claims the claimant made against its insurers were based on wrongful acts “logically or causally related” for the purposes of the single claims provision.
The insured faced legal claims and government investigations regarding two types of conduct – its unfounded public statements forecasting strong financial prospects and certain accounting practices. The insured sought coverage for its legal expenses and liabilities for those matters under its directors and officers policies claiming that there were two seperate claims implicating two coverage limits of $100 million each.
An endorsement in the policy provided that “all claims … that arise out of … facts, circumstances, situations, events or wrongful acts that are logically or causally related shall be deemed to be one claim”. The court held that two things are related when they are reasonably or rationally connected to or associated with one another. The court found that the conduct at issue in the derivative and securities litigation and in the government investigations fell within that meaning. The former involved claims about the public forecasts that the company would continue to grow despite financial trouble, bankruptcy, and liquidation of its major customer. There were also allegations of use of insider information to make a profit for individuals. The government investigations involved the same issues when they began and shifted to include accounting practices. It was the accounting manipulation that enabled the insured to make the misleading public statements.
The court held that the same goes for “causally related”. Two things are causally related when they are connected or associated by cause or by cause and effect. The insured pulled forward its orders allowing it to continue forecasting its 20% target publicly. The pull-forwards and the alleged misleading public statements derived from the same cause – a desire to continue to hit its growth estimate resulting in the same effect, namely, to give the illusion it was growing in line with earlier projections. For these reasons, the costs incurred in each issue according to the plain meaning of the policy language were logically and causally related and only $100 million was payable as the indemnity. The policy’s single claims provision precluded the extra indemnity.
Although South African courts use different tests for interpreting contracts (language, context, and purpose), on these facts a similar outcome would be likely having regard to wording of the single claim provision in the context.
[Navigators Insurance Company and Others v Under Armour, Inc. United States Court of Appeals for the Fourth Circuit, case no 25-1068 (1:22-cv-02481-RDB)]
Navigators Insurance Co. v. Under Armour, Inc., No. 25-1068 (4th Cir. 2026) :: Justia