Texas Federal Court Applies Single Sublimit To Cyber Crime Loss Despite Multiple Electronic Transfers

The United States District Court for the Western District of Texas, applying Texas law, has held that a cyber policy limited coverage to a single $250,000 sublimit for all cyber crime loss during the policy period, regardless of the amount of loss or number of electronic transfers that gave rise to the loss. Perry & Perry Builders, Inc., v. Cowbell Cyber, Inc., 2026 WL 673558 (W.D. Tex. Mar. 9, 2026).

The company received an email purporting to be from its steel vendor that requested payment of outstanding invoices. The next day, the company paid the requested $874,863.70 to the specified account in two transactions. However, unbeknownst to the company, the account was controlled by fraudsters, and the email was from fraudsters posing as its vendor. The insurer paid the $250,000 sublimit that applied to “Cyber Crime Loss,” but the company sued, asserting that it was entitled to an additional $250,000 because its business manager split the intended payment into two ACH transfers that corresponded to two legitimate and separate invoices.

In the ensuing coverage action, the company argued that the two electronic transfers constituted two separate “claims” and that it was thus entitled to an additional $250,000 in coverage. For its part, the insurer contended that a single $250,000 limit applied irrespective of the number of transfers because the applicable endorsement specified that the limit set forth in the policy represented “the maximum amount the Insurer will be liable to pay for all . . . Cyber Crime Incidents.” The court agreed with the insurer’s interpretation, and it concluded that the endorsement “caps at $250,000 what [the insurer] must pay for all of [the company’s] cyber losses during the policy period, regardless of the number and value of [] such loss.”

In denying the company’s motion for summary judgment and granting the carriers’ motion, the court rejected the company’s interpretation, opining that it would make the applicable coverage limits turn on the company’s “bookkeeping choices.”

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