After the insurer denied coverage for a massive computer outage, the insured prevailed on a motion for summary judgment seeking an interpretation of the cyber policy. Southwest Airlines Co. v. Liberty Ins. Underwriters Inc., 2025 U.S. Dist. LEXIS 272540 (N.D. Texas Dec. 2, 2025).

Southwest suffered a systemwide computer failure in July 2016. The failure caused the disruption of flights and affected approximately 475,000 customers with flight concellations or delays. Southwest incurred several costs in connection with its attempts to recover from the system failure.

Southwest submitted a claim to its insurers, including its excess insurer Liberty. The policies included “System Failure Coverage” obligating the insurer to “pay all Loss . . . that an Insured incurs . . . solely as a result of a System Failure.” Liberty provided $10 million of coverage if Southwest’s losses surpassed $50 million. After exhausting the first four layers of coverage, Southwest looked to Liberty to pay on its policy but Liberty denied the claim, contending ,among other things, that Southwest’s covered losses did not amount to $50 million.

Southwest sued seeking coverage under Liberty’s policy and a determination that Liberty acted in bad faith. Both parties moved for partial summary judgment. Southwest asked the court to define the term “but for” in the policy to mean “except for” or “if it were not for.” Southwest also asked that the court find that Liberty violated Texas statutes regarding the failure to timely request information from Southwest in order to process the claim. Liberty sought summary judgment on Southwest’s extra-contractual claims. The motions were referred to the magistrate judge.

The policy defined loss to included both “costs that would not have been incurred but for a Material Interruption” and “costs to reroute or reschedule passenger travel that would not have been incurred but for a “Material Interruption.”

The court agreed with Southwest. Based on the applicable law – and in the absence of any evidence or argument suggesting the parties adopted a competing interpretation – the magistrate judge concluded that the term ‘but for” as used in the policy meant “except for.” The decision did not address whether the policy provided coverage for the disputed expenses.

Southwest’s motion seeking a determination that Liberty violated Texas statutes was denied. Further, Liberty’s motion seeking to relief from the extra-contractual claims was also denied.