Cyber Subrogation

Travelers Cas. & Sur. Co. of Am. v. Blackbaud, Inc., 2026 WL 410048 (Del. Feb. 13, 2026)

Takeaway:  In an important cyber insurance subrogation decision, the Delaware Supreme Court found that insurers can pursue breach of contract claims as subrogees based on remediation costs following a data breach. 

The Court reversed the Delaware Superior Court’s dismissal of the insurers' subrogation claims against software provider Blackbaud and held that insurers who reimbursed their insureds for breach-related investigation, notification, legal, and credit monitoring expenses adequately pled breach of contract claims against the vendor that hosted the compromised data.  

The Court found that aggregated subrogation pleading is permissible where insureds share materially identical contracts and similar losses rejecting the lower court’s requirement that insurers plead individualized facts for each insured at the motion to dismiss stage, holding that identifying the insureds, the common contract terms, the alleged security failures, and resulting categories of damages satisfied notice pleading requirements.  

Further, proximate cause may be inferred at the pleading stage where remediation costs plausibly result from contractual cybersecurity failures. The Court emphasized that causation is ordinarily a factual issue and that insurers sufficiently alleged that the vendor’s failure to maintain contractual security safeguards and breach response measures caused insureds to incur investigation and mitigation costs.

Expert Evidence in Business Interruption Dispute

WinCup, Inc.v. ACE Am. Ins. Co., 2026 U.S. Dist. LEXIS 30269 (S.D.Ohio Feb. 13, 2026)  

Takeaway:  Policy language beats expert testimony in calculating lost earning damages.

In a coverage dispute arising from an electrical fire at a manufacturing facility, the business interruption calculation must track the policy’s “Gross Earnings”definition (and here it keyed off production value). The court rejected the insured's push to base the BI calculation on “lost operational sales” because the policy definition of “Gross Earnings” expressly starts with “total net sales value of production (manufacturing operations).”  

A damages summary judgment motion built on a loss model that does not conform to the policy language is a non-starter. WinCup sought judgment based on its expert’s interpretation, but the court found the arguments “untethered” to the policy language and denied WinCup’s summary judgment motion.

Rule 702 gatekeeping can exclude an insured’s loss expert where methodology is unreliable or based on faulty factual predicates, even if the witness may still testify as a fact witness. The court found the expert’s forecasting approach unreliable, including reliance on “Googling it” rather than a reliable method.

Florida Notice-Prejudice Ruling

ClearwaterKey Assoc. v. Lexington Ins., 2026 U.S. Dist.LEXIS 34616 (M.D. Fla. Feb. 26, 2026)

Takeaway:  Even lengthy reporting delays insufficient to bar coverage where evidence that an immediate investigation would not have disclosed anything materially different from what was disclosed in the insurer’s delayed investigation

In a bad faith lawsuit arising from a claim for leaks in the cast iron plumbing at a beachside condominium building, the MiddleDistrict of Florida ruled there were triable issues of fact as to whether the insurer was prejudiced by a near three-year delay in reporting the loss.Although the insured failed to give timely notice of the loss as a matter of law, the court concluded there were triable issues as to whether the insured could overcome the presumption that the insurer was prejudiced by the untimely notice.

The court explained that a reasonable jury could find that an immediate investigation would not have disclosed anything materially different from what was disclosed in the insurer’s delayed investigation. Although extensive repairs were performed before the loss was reported, the court emphasized that the insured’s plumbing and engineering experts were both able to determine the cause of the loss despite not performing their investigations until years after the loss occurred.

The court’s decision highlights the importance of expert testimony in establishing prejudice for purposes of the notice-prejudice rule. If experts for either the insurer or the insured can offer non-conclusory testimony regarding the cause of the loss, then any impediments to their investigation caused by the delayed notice are likely insufficient to establish prejudice as a matter of law.

TW’s “Hot Tea”

April is shaping up to be a busy one, and we're here for it.

·     New Hire Kelly Johnson:  We're thrilled to welcome Kelly Johnson to theTW team! Kelly brings extensive experience in insurance coverage and litigation with a focus on cyber, D&O, and professional liability, and has held senior roles leading cyber and claims functions from the carrier side. In other words, she knows how the other half thinks. We're glad to have her.

·     Lloyd’s Presentation:  On April 9^th, Judy Selby will be presenting to a Lloyd's members audience on AI and Insurance, keeping the market sharp on what's next.

·      MorningBytes:  On April 10^th at9 am PT, Lisa Weix will join Peter Hawley of Everest as a guest on MorningBytes with Violet Sullivan, Jason Rebholz, and Stu Panensky. Morning Bytes one of the most fun and informative ways to spend a half hour!

·     TW teams up with IBM on all thingsQuantum:  On April 13th, we're co-hosting the Quantum Safe Transformation in Cyber Insurance event in New York with IBM — and yes, it's as cool as it sounds. If you're in the city, we'd love to connect. Seriously, reach out.

·     Intelligent Insurer Conference &Awards:  We close out the month in Chicago for the Intelligent Insurer Conference where Matt Bricker will bespeaking on “Cyber Attacks with Physical Consequences:  Critical Infrastructure, Exclusions andSystemic Risk” and where Judy Selby is a finalist for Cyber Lawyer of the Year.No pressure, Judy. (We're fully expecting a win.)  We will be pre-gaming at the Kimpton so let us know if you would like to join us.

TittmannWeix are Chambers-rated insurance coverage lawyers committed to solving your problems with strategies that are effective, creative, and actually responsive. Our attorneys are recognized thought leaders honored by Law360, Intelligent Insurer, and Zywave, among others.Whether you're a longtime client or just getting acquainted, we're glad you're here.

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