On a Saturday, Microsoft announced that the technical faults behind a worldwide outage of its Microsoft 365 service were finally easing, after businesses had spent a stretch unable to rely on the email, messaging and AI tools that now sit at the centre of ordinary work. The losses may run into the billions, though that is a projection of possible harm rather than a counted sum. In the larger story of how companies have handed their daily operations to distant cloud platforms, the question now is who ends up carrying the cost, and a barrister points toward the quieter answer: a business's own i
Microsoft 365 outage losses may be recoverable through business interruption insurance, lawyer says
The disruption is over, but the bill may not be.
Mark
Why does the insurance angle matter here? The outage is over, isn't it?
Mimi
Because the disruption is over but the bill isn't. Gibbard's point is that a business that couldn't operate normally and lost money may have a claim, if its policy includes business interruption cover.
Luke
Worth being careful there. He said "could well have" a claim. Nobody has said any claims have been filed or paid, and it all depends on individual policy wording.
Mark
And the billions figure?
Mimi
It's the reported possible economic impact worldwide.
Luke
Right, and the source doesn't say who estimated it or how. I'd treat it as a rough scale, not a count.
Mark
What about suing Microsoft?
Mimi
Gibbard said it's possible in theory but rarer and harder to establish. He didn't go into why.
Luke
Which means we shouldn't assume Microsoft's terms help or hurt anyone. That wasn't addressed.
Mark
Johnson's workaround was personal email. Is that realistic?
Mimi
He pointed out it isn't easy, and that sending sensitive data that way would be problematic. It's a stopgap at best.
Luke
He also didn't quantify the productivity loss. That remains unknown.
The Pulse
- A worldwide Microsoft 365 outage halted Outlook, Teams and Copilot, leaving workplaces unable to reach colleagues or clients.
- Estimated losses could reach the billions, a figure no one has yet tallied into an actual total.
- Barrister John Gibbard suggests business interruption insurance may cover losses, while suing Microsoft remains rare and difficult.
- Businesses are being urged to reread their contracts and build backup communication routes, though experts admit personal email is a risky stopgap.
- The coming weeks will reveal whether insurers accept claims tied to a third-party cloud provider's failure.
On a Saturday, Microsoft announced that the technical faults behind a worldwide outage of its Microsoft 365 service were finally easing, after businesses had spent a stretch unable to rely on the email, messaging and AI tools that now sit at the centre of ordinary work. The losses may run into the billions, though that is a projection of possible harm rather than a counted sum. In the larger story of how companies have handed their daily operations to distant cloud platforms, the question now is who ends up carrying the cost, and a barrister points toward the quieter answer: a business's own insurance, if its policy anticipated such an interruption.
On Saturday morning, Microsoft confirmed that the technical problems behind a global outage of its Microsoft 365 service were easing. For hours, and in some cases days, businesses that rely on the cloud-based suite for Outlook, Teams and Copilot had been cut off from tools that sit at the heart of their daily work.
The economic cost could reach into the billions, according to RNZ's reporting. That figure is an estimate of possible impact rather than a tallied loss, and it remains unclear how it was reached. Still, a question has quickly followed: who pays for it?
John Gibbard, a barrister who specialises in insurance law, offered a practical answer. Businesses whose policies include business interruption cover may well have a claim, since such policies respond when an unforeseen event stops normal activity. Whether any particular firm is protected depends entirely on its own wording. A claim against Microsoft is possible in theory, he said, but harder to establish and far less common.
Kenneth Johnson, an AUT associate professor of computer and information sciences, looked at the problem from the technology side. As companies lean more heavily on platforms like Microsoft's, they must accept some risk of outages, and the lost productivity can be significant. He suggested alternative contact routes, such as personal email, but acknowledged that switching channels is hard and that sending sensitive data that way creates its own problems.
For now, the advice from both experts is the same: read the contract closely and have a backup plan ready. What comes next is whether affected firms file claims, and how insurers interpret policy language when the failure belongs to a third-party cloud provider.
On Saturday morning, Microsoft confirmed that the technical problems behind a global outage of its Microsoft 365 service were finally easing. By then, businesses that depend on the cloud-based subscription for Outlook, Teams and Copilot had spent a disrupted stretch unable to rely on tools central to their daily work.
The economic cost of the outage could run into the billions, according to the report from RNZ's Sammy Carter. That figure is an estimate of possible impact, not a tallied loss, and the source does not say how it was calculated. What a lawyer is now pointing out is that some of the money may be recoverable.
John Gibbard, a barrister who specialises in insurance law, said businesses whose policies include business interruption cover could well have a claim against their insurer. He described the situation in plain terms: an unexpected or unforeseen event prevents a business from carrying out its normal activities, and the business suffers a loss as a result. Whether any particular company is covered depends on its own policy.
A claim against Microsoft itself is a different matter. Gibbard said such claims are rarer and harder to establish, though in theory one would be possible. The more practical route, in his account, runs through insurance.
His advice looked forward. Businesses should read their terms and conditions thoroughly and weigh up the damage an outage could cause them. He called that the lesson of the day: companies need to check that they have good systems and processes so they can keep operating even when an event like this occurs.
Kenneth Johnson, an associate professor of computer and information sciences at AUT, approached it from the technology side. As businesses grow more reliant on Microsoft platforms, he said, they have to accept some risk of outages. He said the disruption could lead to a loss in productivity.
Johnson suggested companies could set up alternative contact pathways, such as using personal email addresses. He was candid about the limits of that idea, however. Switching communication channels is not easily done, he said, and sending sensitive data through personal email addresses would be problematic.
What to watch next is whether affected businesses lodge claims with their insurers, and how those insurers read policy wording on outages at a third-party cloud provider. For now the advice from both experts is the same: check the contract, and have a backup plan.
Notable Quotes
Businesses need to check they have good systems and processes in place to ensure they can continue even when events like this occur.— John Gibbard, barrister
As businesses rely more on Microsoft platforms, they have to accept some risk of outages.— Kenneth Johnson, AUT associate professor (paraphrased)
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