World Trade Center Properties, L.L.C. v. Travelers Indemnity Co.

Facts

In spring 2001, Silverstein Properties was the successful bidder on a 99-year lease for the World Trade Center from the Port Authority of New York and New Jersey. As a condition of the lease, Silverstein was required to obtain first-party property insurance on the property. Silverstein engaged Willis of New York as its insurance broker to set up a multi-layered insurance program providing approximately $3.5 billion in coverage on a “per occurrence” basis. Willis circulated an Underwriting Submission containing a specimen copy of its own “WilProp form,” which defined “occurrence” as “all losses or damages that are attributable directly or indirectly to one cause or to one series of similar causes.” Travelers was the only insurer among the appellees to submit its own specimen policy form, which did not define the term “occurrence.” By September 11, 2001, only one participating insurer had issued a final policy form, while the others had issued binders (temporary insurance contracts). On that day, terrorists hijacked two aircraft and crashed them into the Twin Towers, completely destroying the World Trade Center. The parties do not dispute that the loss exceeded $3.5 billion, but they disagree on whether the events constituted one occurrence (with a $3.5 billion maximum recovery) or two occurrences (with a potential $7 billion recovery).