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September 11, 2001, is an unforgettable date for many reasons. In addition to its political, social, and historical importance, it may mark a watershed of insurance history as well. The value of the insurance losses due to the collapse of the World Trade Center (WTC) towers is estimated to total at least $35 billion and perhaps $75 billion. In addition, most of the people killed by terrorism were covered by life insurance. Many business operations were affected, invoking possible business interruption coverage. The airplanes that became weapons of destruction carried passengers whose estates are likely to press claims against the airlines operating the flights (United and American), potentially raising issues of liability coverage.

Nearly all of these policies, like almost all insurance policies, contain some type of war risk exclusions. As discussed below, these exclusions in brief state that the insurance coverage will not apply to losses caused by acts of war. War rhetoric emerged immediately in the aftermath of the disaster, with President George W. Bush and other leaders describing the terrorism as an act of war against the United States and addressing the problem of terrorism as the next war that America must prosecute and win to ensure the survival of the nation and its free society. News accounts and programming picked up the theme, frequently referring to “America at War” and a “War on Terrorism.” Concerns were consequently raised regarding whether the war risks exclusions in applicable policies would bar coverage for the September 11 losses. Many insurers and industry spokespersons responded to these concerns by stating that the carriers would not invoke the exclusion, an undoubtedly wise public relations move.

Publication Citation

37 Tort & Ins. L.J. 817 (2002).