A Delaware court has handed insurance brokers a reminder: the clock to sue them starts at delivery, not at denial.
The case begins with a wrongful death claim and a commercial policy that, First State Crane Service argued, failed it on the very risk it needed covered.
First State bought a commercial liability policy through its broker, L & W Insurance. The policy, written by The Cincinnati Specialty Underwriters Insurance Company, took effect on October 4, 2019.
The next year, things went wrong. On August 6, 2020, a First State employee released a crane's jib at a construction site and struck a worker employed by another contractor. The worker's family later sued First State for wrongful death.
First State turned to its policy, and Cincinnati said no. On August 12, 2022, the carrier denied defense and indemnity coverage, citing an exclusion every claims professional should read twice. It says the insurance "does not apply to: 'Bodily injury' to: . . . [a]ny 'contractor' or 'subcontractor'. . . ." The court noted the clause sweeps in any person employed by another company at the site, and does not require that contractor to have a contract with First State.
So First State sued. In the summer of 2025 it filed separate actions against its carrier and its broker, later consolidated. Against L & W it alleged negligent failure to procure adequate coverage, breach of contract, and breach of fiduciary duty.
Then came the issue that should grab anyone managing broker errors-and-omissions exposure: timing.
L & W moved to dismiss, arguing the negligence and contract claims were too late. Delaware gives plaintiffs three years under 10 Del. C. § 8106. The fight was over when those three years start. First State said the clock began at the 2022 denial, making its 2025 filing on time. L & W said it began at the 2019 delivery, making it years late.
In a June 16, 2026 ruling, the court sided with the broker. Leaning on the Delaware Supreme Court's 1992 decision in Kaufman v. C.L. McCabe & Sons, Inc., Resident Judge Jeffrey J. Clark held that a negligent procurement claim accrues when the carrier delivers the allegedly defective policy, not when it later denies coverage. The wrongful act is the placement, the court reasoned; the denial is only the harm that follows.
First State tried to use the "discovery rule," which can pause the clock when an injury is "inherently unknowable" and the plaintiff is "blamelessly ignorant." It argued the exclusion was ambiguous, so it could not have known the policy was defective until the denial. The court was not persuaded. A coverage exclusion, it said, is not inherently unknowable to a policyholder who received the policy and could read it - and this exclusion was "readable and apparent on its face."
The same reasoning sank the contract claim. The alleged breach happened when First State received the policy in 2019, again outside the three-year window. The court also rejected First State's argument that its claims were not ripe while its coverage fight with Cincinnati continues; that fight, it said, does not strip L & W of its statute-of-limitations defense.
The breach of fiduciary duty claim met a different fate - not timing, but the wrong court. In Delaware, fiduciary duty claims are equitable and belong to the Court of Chancery, even when a plaintiff wants only money. First State conceded the point and asked to move it. The court severed the claim and gave First State sixty days to transfer it to Chancery; if it does not, the claim is dismissed with prejudice.
For brokers and their E&O insurers, the line is clean. In Delaware, exposure for negligent-placement claims is measured from the day the policy is delivered. For insureds, it is a warning: the deadline to sue a broker can lapse before the policyholder ever learns the policy will not pay.
The ruling does not decide whether Cincinnati was right to deny coverage. That dispute, along with a pending motion to intervene, remains live in the Superior Court.
