Pennsylvania Court Rules Excess Insurers Not Liable for Post-Judgment Interest

Decision highlights importance of reviewing insurance policy language for coverage of interest payments

Published on Feb. 19, 2026

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A Pennsylvania state court ruled that policyholders can only recover post-judgment interest under excess liability insurance policies if the policy language expressly allows for it and the stated conditions are met. The court rejected FedEx's argument that the insuring agreement obligating the insurer to pay sums the insured became legally obligated to pay as damages should encompass interest, concluding the policy's definition of "Loss" did not include interest payments.

Why it matters

The decision underscores the importance for policyholders to thoroughly review the defense and payment provisions in their insurance policies to ensure coverage for potentially significant post-judgment interest payments, which can accrue during appeals.

The details

The coverage dispute arose from a $165 million judgment against FedEx in 2011 that was later affirmed on appeal. FedEx sued its excess insurers for refusing to pay over $200 million in post-judgment interest that accrued during the appeal. The court found the policy language unambiguous, stating the insurers' payment obligations for post-judgment interest were only triggered in two specific scenarios that did not occur in this case - when the insurer assumes the defense, or when the insured does not appeal but the insurer elects to do so. The court rejected FedEx's argument that the insuring agreement should encompass interest, concluding the policy's definition of "Loss" did not include interest payments.

  • The incident resulting in the $165 million judgment against FedEx occurred in 2011.
  • The judgment was later affirmed on appeal.

The players

Federal Express Corp. (FedEx)

The company that was sued and obtained a $165 million judgment against it, which later accrued over $200 million in post-judgment interest during the appeal.

National Union Fire Insurance Co. of Pittsburgh, Pa.

One of FedEx's excess insurers that refused to pay the post-judgment interest.

Great American

Another of FedEx's excess insurers whose policy terms largely followed National Union's.

Liberty Mutual

Another of FedEx's excess insurers whose policy terms largely followed National Union's.

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What’s next

The court declined to dismiss FedEx's promissory estoppel and statutory bad faith claims against National Union, finding disputed issues of material fact regarding National Union's conduct during the claims and appellate process.

The takeaway

This case highlights the importance for policyholders to carefully review their insurance policy language, particularly the defense and payment provisions, to ensure coverage for post-judgment interest, which can significantly increase the total liability amount owed.