Ruling in World Trade Center Insurance Case
Thursday, September 26, 2002
New York, NY –
The ruling comes from U-S District Court Judge John S- Martin. He agrees that the wording in contracts from three insurers - including Hartford Fire Insurance Co. - allows those firms to consider the terrorist attacks as a single occurrence. In the specific form of insurance provided by Silverstein's broker - an occurrence is defined as "all losses or damages that can be attributed to one cause or to a series of similar causes. The judge says that under New York law, the terms of an insurance policy are interpreted from the point of view of an "average person on the street." The judge writes that such a person would see the destruction of the twin towers as the result of "one series of similar causes."
For Hartford - which carried a multi-million dollar layer of EXCESS coverage for the property - the ruling is a victory that means it won't have to pay double. Spokeswoman Cynthia Mitchner.
"Hartford has paid 32 million for the World Trade Center property - and the Hartford has satisfied its insurance obligations for the single occurrence and believe we have no further obligations for the World Trade Center loss."
Silverstein Properties spokesman Gerald McKelvey says the company isn't pleased with the ruling - but says it doesn't hurt the firm as much as one might think.
"Obviously we disagree with the ruling and will consider an appeal at the appropriate time. However, these three insurers coverage amounts to a total of $112 million per occurrence, so that limiting these insurers to a single occurrence does not have a material effect on the overall amounts of $6.7 billion to be recovered in the litigation."
McKelvey says Silverstein's total losses from the attacks are about 8.2 billion dollars. And he says the loss of $112 million from the three insurance companies in this case is just 1.5 percent of ALL of the money the firm is attempting to recover.
Nevertheless, Swiss Reinsurance Limited, which carries 22 percent of the trade center's multi-layered policy, says this ruling could be precedent-setting. Swiss won't be in court on this issue until November. But Executive Board member Jacques Dubois says the ruling is STILL a victory for his company - and he says it establishes industry practice.
"I think this a further vindication of the position we have laid out all along - it is one occurrence and we will be judged to have one occurrence as well."
The Port Authority - which owns the property -- has been criticized for trying to persuade those of rebuilding the site to include the 11 million square feet of office space and 600,000 square feet of retail space that existed before the attacks. Officials there declined to discuss the ruling in detail but issued a statement saying that "We continue to believe that the terrorist attacks constituted two separate and distinct occurrences as a legal matter under New York law."
The Lower Manhattan Development Corporation - the agency overseeing redevelopment of the site - says the ruling will NOT affect its planning process.
Cases are still pending more than 17 other companies that insured Silverstein.