What does it mean: II - a real and controversial example = 9/11 terrorism insurance

From Ko's recent blog post "New video of 9/11" (2011) and the comments, I am sure that we all still vividly remember that terrorist attack which demolished New York's World Trade Centre and killed over 3,000 people. What is not so generally well known are the legal battles that followed it.

The lessees (the people who had a 99 year lease on the buildings from the owners) had insured the buildings that were destroyed, and the insurers agreed that they had a legal obligation under the contracts to pay out a lot of money. However, they disagreed about how much to pay out, and it took several court cases over more than five years to finally settle the main disagreement. The insurers for the main lessee, Robert Silverstein, thought that they had to pay him 3.5 billion US dollars (US$3,500,000,000.00), but he thought that they had to pay out twice that amount, or 7 billion dollars. This is not a small difference. A seriously large amount of money was at stake in the argument. Why the argument? What was it about? The insurance contracts obligated the insurer to pay the insured lessee an amount up to 3.5 billion dollars for each occurrence leading to the destruction of the property (Samut, 2006).

The dispute hinged on the meaning of the word occurrence. The insurance companies argued that occurrence meant "one event which might have two or more parts", so that the terrorist attack with two planes was only one occurrence. The lessees argued that occurrence meant "a physically distinct event", so that the terrorist attack with two planes was two occurrences. The US Court system spent a lot of time over five years listening to lawyers, and their expert witnesses, argue about the correct meaning of the words occurrence and event. In the end, an appeals court gave a somewhat mixed verdict based on the meanings and the context of the individual contracts - you can read the details in Robert Samut's summary, United States: 9/11 – An Occurrence That Changed The World.

Words and their definitions matter a lot in every area of life, not just in academic fields. As well as the lawyers, the expert witnesses included professors of English, philosophers and other academics, all of whom are the sorts of people that the US Supreme Court regularly hears opinions from when it is considering a case. (Supreme Court decisions are commonly about what a word or phrase means.)

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References

Ko. (2011, March 8). New video of 9/11. Class Blog - AEP at AUA. Retrieved March 14, 2011 from http://peteraep.blogspot.com/2011/03/new-video-of-911.html

Samut, R. (2006, November 1). United States: 9/11 – An Occurrence That Changed The World. Retrieved March 14, 2011 from http://www.mondaq.com/unitedstates/article.asp?articleid=43762 (This summary by a lawyer gives a reasonable account of the most important points in the legal dispute between the insurers and the insured after the 9/11 terrorist attack)