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Zayo coverage claim denied after Delaware rules bump-up exclusion applies
Delaware Superior Court granted insurers summary judgment on Aug. 5, 2026, holding that Zayo’s $27.1 million settlement triggered a bump-up clause based on who received payment in the deal.
A Delaware court has ruled that a bump-up exclusion wiped out coverage for Zayo Group’s $27 million settlement, granting insurers summary judgment and denying Zayo’s bid to compel payment. The decision was issued Aug. 5, 2026, in an insurance coverage fight that turned on how one policy provision treated the settlement.
According to Insurance Business, the underlying dispute traces to May 2019, when Digital Colony Partners and EQT Infrastructure IV Fund, together “Consortium B,” acquired Zayo. The deal went private at $35 per share, and former public shareholders later sued Zayo’s then CEO in Delaware Chancery, alleging fiduciary duty breaches tied to alleged nondisclosure about possible payment above $35.
The parties ultimately settled for $27,125,000, but insurers declined to cover the settlement. Insurance Business reports that National Union Fire Insurance Company of Pittsburgh reimbursed certain defense costs, while excess carriers ACE American and Arch refused the settlement, arguing the policy excluded from “Loss” any portion of a judgment or settlement that effectively increased the deal price.
The court found the bump-up exclusion applied because the settlement was paid per share only to holders who owned stock at closing, which the judge said made it an effective price increase rather than mere litigation avoidance, roughly equivalent to 12 cents per share. Zayo’s separate claim that National Union acted in bad faith also failed, with the court saying that without a policy breach there could be no bad faith.