Duty To Defend Where Lawsuit Includes Allegations That Do Not "Solely And Exclusively" Fall Within Prior Litigation And Knowledge Exclusions

The Delaware Superior Court, applying New York law, has held that cyber liability insurers had a duty to defend a lawsuit including allegations that raised "a reasonable probability of liability" related to alleged misconduct falling outside of prior claims and knowledge and prior and pending litigation exclusions, notwithstanding that most of the alleged wrongful conduct predated the operative continuity date. Motive Techs., Inc. v. Associated Indus. Ins. Co., 2025 WL 2738704 (Del. Super. Ct. Sept. 5, 2025). The court also held that the insurers were not required to pay costs for a related affirmative action brought by the insured.

The insured, an AI logistics provider, was sued by a competitor for product theft, misappropriating confidential information, and patent infringement, among other allegations. The accusations against the insured began in a series of pre-suit letters (the "Prelitigation Letters"), culminating in the lawsuit. The lawsuit explicitly