Court Sustains Claim Against AIG Over Insurance Denial
Delaware Superior Court allowed a breach of contract claim tied to a top customer representation while dismissing other allegations.
Updated on Nov. 3, 2026 in Public Companies
Delaware Superior Court Judge Kathleen Miller granted in part and denied in part a motion to dismiss in a suit by Surteco North America against AIG Specialty Insurance Company over denied representations and warranties insurance coverage. The court allowed a claim based on a top customer representation but dismissed claims based on material adverse effect and ordinary-course representations.
Why it matters
The ruling clarifies how a materiality scrape in a representations and warranties insurance policy may affect coverage for a seller's representation about top customers. It shows that a vague representation can still survive dismissal when the underlying allegations are sufficient.
The representation covered the nine months before signing, and the customer terminated its contract four months after that period. The court's ruling was issued on July 6, 2026, under case number CA No. N25C-10-178, and the claim that survived is limited to the top customer representation.
The players
AIG Specialty Insurance Company
AIG Specialty Insurance Company is a specialty insurance carrier that underwrites representations and warranties insurance policies used in corporate acquisitions.
Surteco North America
Surteco North America is the North American arm of the German decorative surfaces manufacturer Surteco Group, which acquired Omnova Solutions.
Judge Kathleen Miller
Judge Kathleen Miller is a judge of the Delaware Superior Court, which hears many corporate and commercial disputes.
The details
Surteco North America sued AIG Specialty Insurance Company after the insurer denied coverage under a representations and warranties insurance policy bought for Surteco's acquisition of Omnova Solutions. The policy contained a materiality scrape that removed the materiality qualifier from the top customer representation, which stated the target had received no written notice that a top customer intended to materially limit purchases.
Timeline
Nine months before signing: representation period for no top customer written notice begins.
Four months after the representation period: the top customer terminates its contract.
July 6, 2026: Delaware Superior Court grants in part and denies in part the motion to dismiss.
Market Landscape
Representations and warranties insurance has become a standard tool in private equity and corporate acquisitions, and Delaware courts are the primary forum where its coverage terms are tested. This ruling adds to a growing body of decisions that determine whether a materiality scrape will reach a seller's specific factual representations.
Companies buying other businesses may need to review how representations and warranties insurance policies treat specific seller statements, especially those about major customers. Coverage can turn on policy language that removes materiality qualifiers, which affects how much recovery is available after a deal closes.
The takeaway
Acquirers relying on representations and warranties insurance should confirm exactly how the policy handles materiality, since that language can determine whether a claim survives. Sellers and buyers alike benefit from precise customer representations.
Further reading
For more on how corporate deals and their insurance are structured, see Public Companies.
Source note: This article includes information reported by Aoshearman.
