Larry Silverstein isn’t about to back down on his claim that the loss of the twin towers of the World Trade Center constituted two separate loss events, and has reportedly called the claim by Swiss Re that there was only one loss involved “audacious.” (See IJ Website-Int’l. Oct. 23).
He’s promised a quick response to the insurer’s court action for declaratory relief filed Monday. The immediate issue at stake is whether Silverstein Properties and Westfield America, who acquired the master lease on the WTC in July, can recover over $7 billion for the loss of both buildings as separate loss incidents, or whether they are limited to the recovery $3.5 billion for the loss of one property.
His lawyers apparently think there’s a precedent for his position in a case from 1959 where a court held that two separate losses had occurred when the walls of two buildings collapsed during a rainstorm.
A decision in Silverstein’s favor would have untold effects on industry loss estimates, which up to now have considered the attacks of Sept. 11 to be a one loss event.
The issue is further confused by the fact that no insurance policy had been finalized at the time of the property’s destruction. While Swiss Re acknowledges that it is liable for 22 percent of the loss(es), there are an additional 22 companies who were involved in negotiating the final terms of coverage at the time of the attack. According to reports no final definition of “occurrence” had been agreed on, giving both sides leeway to argue their respective positions.
The insurers have, however, begun paying Silverstein for lost rental income of around $25 million per month. At that rate he expects to receive at least $1.5 billion during the next five years or more that it will take to rebuild the WTC facilities.
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