Also known as: final adjudication meaning · final adjudication clause · final adjudication vs in fact
Final adjudication is a court's conclusive, non-appealable ruling on the merits, and in D&O policies it is often the trigger that activates conduct exclusions.
A final adjudication is a court's definitive determination of an issue that is no longer subject to appeal. In D&O and management liability policies, fraud and illegal-profit exclusions frequently apply only after a final adjudication in the underlying action establishes the wrongful conduct, which means the insurer keeps advancing defense costs up to that point. For founders this wording matters a great deal: a "final adjudication" trigger is far more protective than an "in fact" trigger, because mere allegations, negotiated settlements, or interim rulings do not activate the exclusion.
Final adjudication means a court has issued a conclusive ruling on the merits that is no longer open to appeal. In insurance, it is most important in D&O conduct exclusions, which often apply only after a final adjudication establishes fraud or improper personal profit. Until that point, the insurer usually keeps defending or advancing defense costs rather than denying the claim.
The trigger for a conduct exclusion decides how easily an insurer can walk away from your claim. A "final adjudication" trigger requires an actual court ruling in the underlying case, so allegations and settlements do not cut off coverage, whereas weaker "in fact" wording lets the insurer deny based on what it argues actually happened. Ask your broker to confirm your D&O form uses final adjudication language, ideally in the underlying proceeding.
Definitions are educational and may be modified by your specific policy language, endorsements, and state rules. For regulatory guidance, refer to the California Department of Insurance or the NAIC.
Last updated: July 2026.