One Attack, Two Attack, One Event, Two

More than five years after the Twin Towers fell, a federal appeals court declared that the owner of the property should be paid twice the limit on many of the insurance policies he had in place on September 11, 2001-- and only once on some of the other policies he had in hand. The 2nd U.S. Circuit Court of Appeals affirmed a trial judge's ruling that when the two hijacked planes hit the buildings it was not a single "incident" for insurance purposes but rather two separate incidents, both of which triggered payment clauses in some of the insurance contracts.

The net result from this complicated case is that Larry Silverstein will receive $4.6 billion in insurance proceeds for the loss of the World Trade Center instead of the $7 billion he had sought. That may not seem like a wipe-out victory for Silverstein to you, until you consider that he had only ensured the complex for $3.5 billion in the first place. In other words, by arguing that the attack was really two attacks in one, and thanks to some shoddy language included into some of the policies, Silverstein is likely to receive more than $1 billion more in insurance than he had a right to expect on September 10, 2001.

Given the amount of dough at issue, the case may be appealed even further, to the U.S. Supreme Court, but I'm betting that the Justices will want nothing to do with this one. So think about those numbers the next time your car insurance company nickels and dimes you over a rental car or the cost of a replacement car when yours is totalled. Think about how some of those insurance officials feel today, especially the ones who allowed to be included in Silverstein's policies for the World Trade Center an ambiguous definition of the word "event"-- the fateful phrasing that cost about as much as any single word ever has.

One attack? Two attacks? One event, two? Whatever you think of the result, and there are folks on both sides of this fight who made plenty of good logical and legal points, it's a good thing that this nasty, expensive fight seems to be drawing to a close. After five years, it's time for those insurance companies to pay whatever they owe; time for Silverstein to use that money to rebuild the site; time for the federal courts in and around New York to be able to focus on other matters.

By Andrew Cohen |  October 19, 2006; 9:00 AM ET
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