United Airlines (UA, Chicago O'Hare) has filed a USD5 million lawsuit against Homesite Insurance Company, alleging it is the only one of eight insurers participating in the airline's cyber insurance programme to refuse payment for losses stemming from the July 2024 CrowdStrike outage that grounded thousands of flights.

The legal dispute comprises two competing claims filed in the US District Court for the Northern District of Illinois. While United seeks damages for breach of contract and bad faith, Homesite has filed a separate action for declaratory judgment, asking the court to rule that it owes the airline nothing.

United's claim

United Airlines Holdings' complaint, filed on July 21, states it was forced to cancel more than 1,600 flights, about 12% of its total schedule, following the massive IT failure on July 19, 2024. The disruption was triggered by a defective software update from cybersecurity vendor CrowdStrike, which paralysed Microsoft Windows systems worldwide and left more than 200,000 United passengers stranded during one of the busiest travel weekends of the summer.

The airline said it incurred more than USD113.6 million in total covered losses, including USD20.4 million in legally mandated passenger compensation for meals, hotels, and travel credits.

United said it had maintained a comprehensive, multi-layered cyber insurance programme providing up to USD200 million in coverage above a USD50 million self-insured retention (SIR). Part of that was an insurance policy by Homesite valid from June 1, 2024, to June 1, 2025, providing a USD5 million limit of liability in excess of USD95 million in coverage.

The dispute

United has dismissed Homesite's reasons for denying coverage as "pretextual and meritless", alleging the insurer wrongly characterised payments to stranded passengers as "voluntary", "discretionary", and "gestures of goodwill", rather than legally mandated compensation.

"The US Department of Transportation directed United to compensate its stranded passengers, making clear that any failure to do so would constitute a violation of federal law carrying civil penalties of USD75,000 per violation – penalties that, across 1,600 cancelled flights and hundreds of thousands of affected passengers, threatened liability in the hundreds of millions, if not billions, of dollars," the airline stated.

"Homesite's refusal is not a good-faith coverage dispute," the airline claimed. "It is an outlier position, unsupported by the plain language of the policy Homesite itself issued, contradicted by the conduct of every other insurer that evaluated the same claim."

Homesite, however, has characterised the payments as "operational choices" made without its prior written consent. The insurer argues they do not qualify as "passenger compensation" under the policy because United failed to identify a specific law requiring the payments.

Claims of double recovery

Homesite also alleges that United is seeking an "impermissible double recovery". It contends that United recovered funds from third parties for the same losses and is now attempting to use those recoveries to erode its USD50 million self-insured retention. Under the policy's terms, Homesite argues, those recoveries should instead reduce the total amount of loss that United may claim.

Additionally, Homesite disputes United's calculation of "downstream revenue losses" – alleged losses from flight segments that operated as scheduled – arguing that the assumption that passengers would not have rebooked their travel is unsupported.

Homesite maintains that, after applying the appropriate offsets and excluding losses it considers uncovered, it owes United nothing under the policy.

The airline noted that the parties participated in non-binding mediation in April 2026 but were unable to resolve the dispute. The court has set a telephonic status hearing date for September 10, 2026.