Southwest Airlines' Cyber Coverage Suit Takes Off

Highlights

The Fifth Circuit recently reversed a district court's denial of a cyber insurance claim resulting from a widespread system failure, despite suggestions that costs were voluntarily incurred by the insured and the result of discretionary business decisions

Courts typically avoid interpretations of provisions in an insurance policy that would render coverage illusory or effectively wipe out entire portions of the policy

Policyholders should not be afraid to second guess insurers' narrow policy interpretations of key insurance policy terms

With a new year lands a new court decision to consider as companies grapple with losses resulting from a computer system failure under a cyber insurance policy. This decision is important for corporate policyholders because it refuses to take a narrow view of which first-party business income losses are covered under a cyber insurance policy.