The $200 Million Omission
What the FedEx Coverage Disaster Teaches Every Broker in America
A $165M verdict. Over $200M in interest accrued. And the worse part? The excess tower is off the hook, with a coverage dispute ruling in favor of the carriers.
If you’re the agent who built the excess tower that fell apart when coverage needed to come through, the first question you’re going to ask yourself is, “Did I omit something? Did I screw this up?”
Welcome to 0omissions.com. The purpose of this blog is to:
1) empower insurance agents with strategies that help prevent serious omissions
2) catechize the insurance public on current trends in the specialty commercial insurance market.
My name is Lucas Roberts. I’m an insurance professional who has worked both on the carrier side as an underwriter and as a wholesaler broker. I work with a variety of products such as Directors & Officers Liability, Employment Practices Liability, Fiduciary Liability, Crime Insurance, Professional Liability, among many others. I write a monthly blog for the Professional Liability Underwriting Society called “Claims Made Bites”, and I’ve been published on prestigious blogs such as the D&O Diary. I love Claims Made coverages. I love reading about it, talking about it, and writing about it.
If you’re an insurance professional like myself, or perhaps you’re just interested in these coverages as a consumer, then this blog is the right place for you.
For the premier article , I wanted to write about a case that best exemplified my intent as the author. I hate when claims are denied. There’s nothing worse than having someone invest in an insurance policy to transfer their risk, only to have the policy fall apart at the 9th hour. Even insurance professionals can get caught off guard when these denials happen. They’ll scour the policy to see if there’s any room for ambiguity, and lament their findings when, sure enough, there’s a clear and unambiguous exclusion listed in the policy that bars coverage for the claim in question.
While the details of this case are still ongoing, there’s enough information here for us to draw some strong conclusions. If the biggest brokers can mistakenly omit consequential provisions in the policies they write, then it can happen to any of us.
I first saw this case highlighted in Hunton’s very insightful Insurance Recovery Blog. The case in question is Federal Express Corp. v. National Union Fire Insurance Co. of Pittsburgh, Pa., et al. Fedex had a nuclear verdict of $165M for a wrongful death lawsuit back in 20151. A Fedex truck had crashed into the back of a pickup truck killing the driver and her daughter. Fedex appealed this verdict and the case was prolonged.
Fedex had purchased insurance, a large tower filled with a variety of carriers that expanded the total aggregate of coverage that was designed to respond to nuclear verdicts such as this. Fedex had these claims reported to the carrier expecting coverage to continue. You can imagine their shock and horror when one of the excess carriers notified the insured that they were refusing to pay toward the more than $200M in post-judgement interest that had accrued during the appeal. The entire excess tower won on the same policy language, leaving Fedex to bear this massive post-judgement bill all by themselves.
The Hunton blog post succinctly breaks down the insurance provisions within the policy that precluded coverage, but for our purposes I want to highlight a very specific part of the policy that was cited for the claim denial. The Appeals clause (Section VI.A, Endorsement 26 of National Union policy) reads as follows:
“If the Insured or the Insured’s underlying insurers do not appeal...we may elect to do so. If we appeal, we will be liable for...interest...”
I know not all of us speak legalese, so what does this mean?
First, what’s post-judgement interest? The basic definition is:
interest on any judgment against the insured that accrues from the time the judgment is entered by the court to the time the actual payment is made.
For Fedex, the $165M verdict came down in 2015. Fedex appealed, and the New Mexico Supreme Court upheld the ruling in 2022. And according to New Mexico state law, post-judgment interest for tortious conduct is 15%, which is how Fedex’s post-judgement bill ballooned to exceed the initial verdict.
This raises a broader issue that Frederick Fisher, J.D., CCP, one of the foremost authorities on legal risk management and claims-made insurance, identified when reviewing this piece: the cost versus necessity of multi-jurisdictional legal reviews on large national accounts2
If that wasn’t devastating enough, Fedex learned that according to their excess policy, the only way the carrier would pay the post-judgement interest is if:
The underlying carriers (or insured) do not appeal
The excess carrier decides to appeal
Since Fedex appealed, this meant that according to the clear and unambiguous language of the policy the excess carrier was not on the hook for the post-judgement interest. In order for the excess carrier to pay out, THEY would have had to be the ones who appealed, not the insured.
The Hunton blog, as informative as it is, did not answer some of my most burning questions about this case:
Did Fedex not try to coordinate their appeal efforts with their carrier partners?
Did they really leave their carriers in the dark and not check to see if their appeal would inhibit coverage?
And more importantly for us; did Fedex’s risk manager know about and disclose the Appeals Provision in this excess policy to Fedex BEFORE Fedex appealed the verdict?
To answer this, I went to Allegheny County’s docket portal to review the documents from the claim denial litigation for myself. While I couldn’t find a definitive answer for the first question, I was able to locate a resounding answer to the second.
No, the risk manager did NOT disclose the Appeal Provision to Fedex.
How do we know this? Because according to court documents Fedex brought it up!
Fedex moved to preclude the carrier “from making any statements or comments regarding the purported “negotiation” of the relevant terms of the insurance policies here at issue and references to the revenue, wealth, and corporate size of FedEx’s insurance broker, Marsh USA, Inc. (“Marsh”).
Fedex did not want the carrier to get in front of a jury and argue that Fedex should have known about the provision because Fedex used an insurance professional to place it. “It’s not our fault that they didn’t read their policy. They have an insurance broker who helped them buy our policy, for crying out loud!”
Not just any insurance broker, mind you. Fedex has the largest insurance broker in the world as their agent.
Here are some of the reasons Fedex used to argue against the carrier citing their broker’s expertise or service. I’ll just quote straight from Fedex’s motion (emphasis mine):
2. Despite the extensive documents produced in this case by FedEx, Marsh, and the Defendants, there is no evidence that Marsh or FedEx ever “negotiated” the wording of any provision included in any of the Defendants’ policies. Because the record contains no evidence of policy language negotiation, any comments by defense counsel that FedEx or Marsh negotiated the applicable policy language are without foundation and cannot possibly make any fact more or less probable under Rule 401. Thus, such unfounded statements are inadmissible under Rule 402.
And:
4. Additionally, the Defendants (the carrier) have identified no witness known to have personal knowledge of any purported negotiation between FedEx and/or Marsh and National Union in 2010, the year the policies were placed.
Fedex is basically saying “The carrier didn’t find any evidence that our broker negotiated, or even brought up this provision!” That’s…quite the admission. Presumably the carriers would have served several deposition subpoenas to the relevant brokers and risk managers who helped place this policy and have their testimony entered into the record. Fedex preemptively made sure that this type of evidence could not be used against them in front of a jury.
The judge granted Fedex’s motion, basically confirming there was no evidence that any of the brokers or risk managers ever brought up this provision, certainly not with the carrier, and maybe even with Fedex themselves.
That last part is very important for us as insurance professionals. What if the broker never disclosed this provision to Fedex? Presumably they would have been aware of Fedex’s intent to appeal. As the insurance professionals, did anyone think to:
Tell the carriers and check to see if coverage would continue to apply?
“Hey, the insured is looking at appealing, is that cool?”
Check the policies for language addressing when the insured appeals a judgement
As the insurance professionals, the brokers would have been relied upon to flag any restricting policy language, and it’s clear that that didn’t happen here.
The evidence the carriers gathered for their case, evidence that Fedex reviewed and moved to preclude, showed that the broker, the insurance professional, did not negotiate the policy language in the Appeals Provision, or apparently “ANY PROVISION included in ANY OF THE DEFENDANT’S POLICY!” (direct quote).
Imagine Fedex arguing, “the carrier hasn’t shown a SINGLE INSTANCE where our broker negotiated a SINGLE PROVISION in ANY of our policies!” while their broker nods along, cringing with embarrassment.
Even though Fedex was able to convince the judge to preclude any evidence that their insurance broker was a sophisticated, capable broker, they still fell short. On January 21, 2026, the judge ruled in favor of the carrier (although they still have a bad faith claim issue the court is grappling with). But in regards to any coverage towards the $200M post-judgement interest that Fedex was hoping to get paid…no. The judge affirmed that the policy language is clear and unambiguous, and because Fedex decided to appeal, they were not privy to any of the coverage that may have remained had Fedex chosen not to appeal instead.
I cannot imagine the intensity of Fedex’s conversations with their broker.
“How could you have let this happen?”
“It was your job to flag this stuff, what do you think we pay you for?”
“How are you going to fix this?”
Anyone who has been involved in a claim denial situation knows better than most that these conversations are seldom cordial, and can often lead to the insurance professional themselves filing a claim with their carrier regarding their professional liability. This is why insurance agents carry Errors & Omissions insurance coverage, to protect them for when they make an error, or omit something to their clients that causes financial damage.
For this particular broker, the claim denial was litigated in Pennsylvania which does not hold insurance agents to a fiduciary standard of care. The linked legal post here notes that an insured in Pennsylvania would need to demonstrate that a special relationship was established, “for example… through overmastering influence and/or final decision-making power ceded to the insurance agent or broker--the insurance agent or broker is assumed to have undertaken additional, fiduciary duties.” If a fiduciary duty cannot be established, then the broker is usually safe from claims alleging failure to disclose.
While this legal standard may benefit the agent from taking on a large claim, it still doesn’t solve the larger problem; that an important policy provision was missed, and coverage MAY have been available but was never negotiated for. This is damaging not only for the insured whose claim was denied, but the insurance agent’s reputation becoming tarnished.
As mentioned earlier, I’ll be using “0 omissions” to explore the sometimes sneaky and onerous policy provisions that often catch insureds and their insurance professionals completely off guard. Not every exposure can be covered, and it’s a fool’s errand to try and predict how claim denials will end up in court as I’ve noted elsewhere.
Regardless, as insurance professionals we should hold ourselves to the highest standard possible and work to make sure our clients are getting the best insurance coverage available, unencumbered by unfavorable policy wording when possible.
Until next time agents, stay bindin and grindin 🫡.
This article is provided for educational and informational purposes only and does not constitute legal advice, insurance advice, or professional consulting of any kind. The analysis contained herein is based solely on publicly available court documents, statutory law, and secondary legal sources, all of which are cited and linked above. No attorney-client relationship, broker-client relationship, or any other professional relationship is created by reading or relying on this article. The author makes no representations or warranties regarding the completeness, accuracy, or current status of the legal proceedings discussed, which remain active and ongoing as of the date of publication. Court records and legal proceedings are subject to change, and readers should verify current case status independently. Nothing in this article should be construed as a characterization of the conduct, competence, or legal liability of any named party, firm, or individual. For specific questions regarding insurance coverage, policy language, claims handling, or professional liability exposure, readers should consult with competent coverage counsel and/or a licensed insurance professional in their jurisdiction. The views expressed are solely those of the author in his individual capacity and do not represent the views of his employer or any affiliated organization.
It's worth noting that this coverage dispute actually began in two courtrooms simultaneously. Because FedEx is incorporated in Delaware, National Union filed a preemptive declaratory judgment action in Delaware Superior Court in August 2022, just days before FedEx filed the Pennsylvania action. The Delaware court ultimately stayed its proceedings in favor of the Pennsylvania action, recognizing that Pennsylvania was the more comprehensive forum. The Delaware Supreme Court weighed in on related issues in 2023. For our purposes, the operative ruling is the January 21, 2026 Memorandum Opinion issued by the Honorable Mary C. McGinley in the Court of Common Pleas of Allegheny County, Pennsylvania — Civil Action No. GD-22-011088.
https://law.justia.com/cases/delaware/supreme-court/2023/287-2023.html
Frederick Fisher, J.D., CCP — one of the foremost authorities on legal risk management and claims-made insurance — identified an important broader issue when reviewing this piece: the cost versus necessity of multi-jurisdictional legal reviews on large national accounts. FedEx operates across all 50 states. A catastrophic verdict could happen anywhere. New Mexico's post-judgment interest rate for tortious conduct — 15% annually — is among the highest statutory rates in the country. A broker managing a national trucking account should know that a catastrophic verdict in New Mexico carries uniquely punishing interest exposure compared to, say, a judgment in federal court subject to the much lower federal post-judgment interest rate. For most mid-market accounts, a full 50-state interest rate analysis before major litigation decisions isn't practical. But for a national account of FedEx's scale, with a tower this large and a verdict this size, the question has to be asked: did anyone map the jurisdictional interest exposure before the appeal was filed? The public record suggests the answer is no. And at approximately $67,800 per day in accruing interest under New Mexico's 15% tortious conduct rate, every day that question went unasked cost FedEx dearly. This is the kind of multi-layered analysis that separates reactive insurance placement from proactive risk management — and exactly the kind of issue 0omissions.com exists to illuminate.