Christie, Pabarue Insurance Attorney: Insurers Should Beware When Paying Sept. 11 Claims October 23

In the aftermath of Sept. 11, many insurance companies made announcements that they would forego consideration of their policies’ “war risk” exclusion to World Trade Center-related claims.

The insurers decisions were rightly applauded as the recognition of the need to respond to a national emergency. Moreover, with the blame for Sept. 11 being placed at the feet of Osama bin Laden and his al- Qaeda terrorist network, the “war risk” exclusion was in any event quickly dismissed as being inapplicable, since the generally required “state sponsorship” element was lacking.

Randy J. Maniloff, an insurance coverage attorney at Philadelphia-based Christie, Pabarue, Mortensen and Young, cautions that as new facts and theories emerge about the perpetrators of Sept. 11, insurers must be very careful when paying such claims, or risk waiving the “war risk” exclusion for its use in the future. “As the investigation of Sept. 11 moves forward, as well as the on-going anthrax situation, other countries are beginning to emerge as possibly having involvement in these actions,” Maniloff stated.

Maniloff pointed to two editorials in last week’s Wall Street Journal, as well as a lengthy piece by former CIA director James Woolsey in the Oct. 18 issue of The Wall Street Journal, as making compelling arguments for Iraq’s potential complicity in September 11 and the anthrax mailings.

Maniloff believes that insurers in the process of paying Sept. 11 claims should take these new developments in the investigation very seriously.

“If it is determined that Iraq — a “state sponsor” — was in fact involved in the events of Sept. 11, then one of the key factors in determining the applicability of the ‘war risk’ exclusion may have been present,” Maniloff noted. For this reason, Maniloff cautions that insurers that are paying.

Sept. 11 claims under a policy that contains a “war risk” exclusion should do so under a reservation of rights and pursuant to a statement of non-waiver, to prevent a potential argument that they “waived” the “war risk” exclusion for future claims.

“Given that the investigation of Sept. 11 is so fluid, as well as likely going to take a long time to complete, insurers should make clear that they are paying claims without regard to the potential applicability of the ‘war risk’ exclusion,” Maniloff advised.

“We are at war and face a real possibility for future attacks in this country. At some point, the insurance industry may determine that the ‘war risk’ exclusion is applicable, and face pressure from their shareholders and/or reinsurers to deny claims accordingly. To prevent a ‘waiver’ argument, and essentially becoming a victim of their own good deed surrounding Sept. 11 claims, insurers must take care to pay these claims now with the necessary procedural safeguards,” Maniloff said.

Maniloff first raised the issue of the potential for waiver of the “war risk” exclusion in an article published in the Sept. 25 issue of Mealey’s Litigation Reports: Insurance titled “The War Risk Exclusion — Looking Beyond the Events of September 11th.”

For more information, contact Randy J. Maniloff at (215) 587-1632 or For additional information about Christie, Pabarue, Mortensen and Young, see