Prior to the September 11, 2001, attacks that destroyed the World Trade Center (

Question

Prior to the September 11, 2001, attacks that destroyed the World Trade Center (WTC) towers, 22 insurance companies had issued property insurance binders covering the WTC complex. These binders were issued to Silverstein Properties, Inc., the holder of a 99-year lease of the WTC complex under an agreement with the Port Authority of New York and New Jersey. A binder is a temporary contract of insurance that is in force until a formal insurance policy is issued by the insurer. The 22 insurers intended to issue formal insurance policies to Silverstein, but very few had done so as of 9/11. Therefore, the binders established and limited their obligations to pay Silverstein after the destruction of the WTC complex. Property insurance binders and policies often provide that the insurer’s obligation to pay is triggered when a covered “occurrence” results in damage to or destruction of the relevant real estate. Binders and policies also have policy limits, which are both the amount of insurance coverage purchased and the maximum sum that the insurer can be obligated to pay for a covered claim. The policy limits in a property insurance binder or policy typically apply on a per-occurrence basis. For example, if the policy limits are $200,000, the insurer may become obligated to pay up to a maximum of $200,000 for losses resulting from one occurrence and up to another $200,000 on losses stemming from a separate occurrence. Various ones of the 22 insurers that had issued binders regarding the WTC complex prior to 9/11 became involved in litigation with Silverstein over the amounts they were obligated to pay after the events of 9/11. Three of the insurers that were parties to the litigation—Hartford Fire Insurance Company, Royal Indemnity Company, and St. Paul Fire and Marine Insurance Company—had issued binders whose combined policy limits totaled approximately $112 million dollars, out of a total of approximately $3.5 billion in insurance coverage contemplated by the binders and policies issued by all 22 insurers.

Another party to the litigation was Travelers Indemnity Co., which also promised millions of dollars of coverage under a binder that differed in a key respect from the Hartford, Royal, and St. Paul binders. The estimated cost of rebuilding the complex was $5 billion or more. In the litigation referred to above, a federal court agreed with an argument made by Hartford, Royal, and St. Paul: that their binders should be interpreted as containing the terms set forth in a form binder known as the “WilProp form,” which had been circulated among many of the various insurers. The WilProp form made the insurance coverage applicable on a per-occurrence basis and contained a specific definition of occurrence. (The definition will be quoted later, in the edited version of the decision ultimately issued by a federal court of appeals.) The court then addressed the critical issue: whether, for purposes of the binders at issue, the two plane attacks that destroyed the WTC towers on 9/11 were one occurrence or, instead, two occurrences. If, as argued by Hartford, Royal, and St. Paul, the two plane attacks were one occurrence, those three insurers would be obligated to pay Silverstein a total of $112 million. If, as argued by Silverstein, the two plane attacks were two occurrences, the three insurers would be obligated to pay Silverstein a total of $224 million. Although most of the remaining insurers were not parties to the case, a determination of the extent of their liabilities to Silverstein was likely to be heavily influenced by the court’s decision because it seemed reasonably likely that various ones of the other insurers would be viewed as having agreed to the same form binder terms to which Hartford, Royal, and St. Paul had agreed. Thus, although the actual amount in controversy under the Hartford, Royal, and St. Paul binders ranged from a minimum of $112 million to a maximum of $224 million, the practical economic stakes appeared to be much higher. Ruling on a motion for partial summary judgment filed by Hartford, Royal, and St. Paul, the district court held that in view of the WilProp form’s definition of occurrence, the two plane attacks on the WTC were one occurrence for purposes of those companies’ binders. Travelers, however, had issued a binder that differed from the form binder employed by Hartford, Royal, and St. Paul. The Travelers binder called for coverage on a per-occurrence basis but did not contain a definition of occurrence. Silverstein moved for partial summary judgment, asking the court to rule that under the Travelers binder, the two plane attacks constituted two occurrences. Concluding that there were genuine issues of material fact to be resolved by a jury in regard to the plane attacks on the WTC, the district court denied Silverstein’s motion. Appealing to the U.S. Court of Appeals for the Second Circuit, Silverstein asked the appellate court to overturn the district court’s grant of partial summary judgment to Hartford, Royal, and St. Paul. Silverstein also appealed the district court’s denial of its (Silverstein’s) motion for partial summary judgment against Travelers. Should the court affirm the grant of summary judgment for Hartford, Royal, and St. Paul and should it affirm the denial of Silverstein’s motion for summary judgment against Travelers?

Explanation / Answer

Given Information :

Facts :

Prior to the September 11, 2001, attacks that destroyed the World Trade Center (WTC) towers

22 insurance companies had issued property insurance binders covering the WTC complex

These binders were issued to Silverstein Properties, Inc., the holder of a 99-year lease of the WTC complex under an agreement with the Port Authority of New York and New Jersey.

A binder is a temporary contract of insurance that is in force until a formal insurance policy is issued by the insurer.

The 22 insurers intended to issue formal insurance policies to Silverstein, but very few had done so as of 9/11

The binders established and limited their obligations to pay Silverstein after the destruction of the WTC complex.

Property insurance binders and policies often provide that the insurer’s obligation to pay is triggered when a covered “occurrence” results in damage to or destruction of the relevant real estate.

Binders and policies also have policy limits, which are both the amount of insurance coverage purchased and the maximum sum that the insurer can be obligated to pay for a covered claim.

The policy limits in a property insurance binder or policy typically apply on a per-occurrence basis. For example, if the policy limits are $200,000, the insurer may become obligated to pay up to a maximum of $200,000 for losses resulting from one occurrence

Up to another $200,000 on losses stemming from a separate occurrence. Various ones of the 22 insurers that had issued binders regarding the WTC complex prior to 9/11 became involved in litigation with Silverstein over the amounts they were obligated to pay after the events of 9/11.

Three of the insurers that were parties to the litigation—

Hartford Fire Insurance Company

Royal Indemnity Company

St. Paul Fire and Marine Insurance Company—had issued binders whose combined policy limits totaled approximately $112 million dollars, out of a total of approximately $3.5 billion in insurance coverage contemplated by the binders and policies issued by all 22 insurers.

Another party of litigation =

Travelers Indemnity Co.,

which also promised millions of dollars of coverage under a binder

Praposed Cost :

The estimated cost of rebuilding the complex was $5 billion or more.

In the litigation referred to above,

Federal court agreed with an argument made by

Hartford, Royal, and St. Paul: that their binders should be interpreted as containing the terms set forth in a form binder known as the “WilProp form,” which had been circulated among many of the various insurers.

The WilProp form made the insurance coverage applicable on a per-occurrence basis and contained a specific definition of occurrence.

The court then addressed the critical issue:

for purposes of the binders at issue the two plane attacks that destroyed the WTC towers on 9/11 were one occurrence or, instead, two occurrences.

If, as argued by Hartford, Royal, and St. Paul, the two plane attacks were one occurrence, those three insurers would be obligated to pay Silverstein a total of $112 million.

If, as argued by Silverstein, the two plane attacks were two occurrences, the three insurers would be obligated to pay Silverstein a total of $224 million.

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For giving result we need to analyse the following points.

1 ) To check the rules , regulations of the insurance authorities

2) Terms & condition in the defined policy

etc

Now above mentioned points are procedural aspects of insurance.

Now in the case this has been clearly mentioned that if two incidence happens then insurance company need to give the amount of two occurrence ie. $ 224 million.Again this is clear message that two consecutive attack takes place.

Its Trvallers companies role to convey the right message to court.By rule & system the court will give decision on payment of two occurrence instead of one occurrence.

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