Alyssa Lane
Larry Silverstein, an American billionaire businessman, signed a 99-year lease for the World Trade Center complex in July 2001, just months before the September 11 attacks. As the new leaseholder, Silverstein was contractually obligated to insure the World Trade Center, which he did with an all-risk insurance policy that included terrorism coverage. After the attacks, Silverstein and his insurers became embroiled in a multi-year dispute over whether the attacks constituted one or two events under the policy, with Silverstein ultimately receiving a $4.55 billion payout in 2007. Despite appearances, Silverstein was not the sole leaseholder, as he led a consortium of investors and lenders who had a say in insurance coverage. Silverstein's decision to purchase terrorism insurance before 9/11 has been scrutinized, but it's important to note that commercial insurance policies sold in the U.S. before 9/11 typically covered terrorist incidents as the risk was considered remote.
| Characteristics | Values |
|---|---|
| Name of leaseholder | Larry Silverstein |
| Date of signing the lease | July 24, 2001 |
| Duration of the lease | 99 years |
| Insurance coverage | $3.5 billion |
| Number of insurers | 25 |
| Payout from insurers | $4.55 billion |
| Litigation period | 2001-2007 |
| Current net worth of Larry Silverstein | $1 billion |
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What You'll Learn
Silverstein's WTC insurance policy was standard
Silverstein's insurance policy for the World Trade Center was standard. As the new leaseholder of the World Trade Center, he was contractually obligated to insure the property, and he did so by purchasing an all-risk insurance policy, which was typical for commercial properties at the time. The policy included terrorism coverage, which was also standard for commercial insurance policies before 9/11.
The World Trade Center had been the target of a terrorist attack in 1993, and insurers had paid out an estimated $510 million in damages. As such, it was not unusual for Silverstein to seek similar coverage when he took over the lease in 2001.
Silverstein led a consortium of investors and lenders, including GMAC Commercial Mortgage, Westfield America Inc., and real estate investor Lloyd Goldman. All these entities had a say in deciding the insurance coverage for the property. The total insurance coverage of $3.55 billion was not solely decided by Silverstein but was the minimum demanded by his lenders.
After the 9/11 attacks, Silverstein and his insurers became embroiled in a multi-year dispute over whether the attacks constituted one event or two under the terms of the policy, which provided for a maximum of $3.55 billion coverage per event. The dispute was finally settled in 2007, with insurers agreeing to pay out $4.55 billion. Silverstein also faced legal battles with other parties, such as the Port Authority, during the rebuilding process.
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Silverstein's payout was $4.55 billion
Larry Silverstein, the leaseholder of the World Trade Center, was contractually obligated to insure the property when he took over the lease in 2001. He led a consortium of investors and lenders, including GMAC Commercial Mortgage, Westfield America Inc., and real estate investor Lloyd Goldman, who all had a say in deciding the insurance coverage amount and had claims on the insurance payout.
Silverstein purchased an all-risk insurance policy that covered terrorism, which was not uncommon at the time, as the risk was considered remote. After the September 11 attacks, Silverstein took the insurance company to court, arguing that the attacks constituted two separate occurrences under the terms of the insurance policy, which provided for a maximum of $3.55 billion coverage per event.
The court agreed with Silverstein, and he was awarded $4.55 billion in a settlement reached in 2007. This amount was not as much as Silverstein had sought, as the cost of rebuilding the World Trade Center was estimated at $9 billion in 2004. Silverstein also ran into disputes with other parties during the rebuilding effort, including the Port Authority, with whom he reached an agreement in April 2006 to retain the rights to build three office towers.
Despite receiving the insurance payout, Silverstein's net worth as of December 2024 was estimated at only $1 billion by Forbes, indicating that the payout was likely used for rebuilding efforts and other expenses related to the World Trade Center project.
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Silverstein wasn't the sole leaseholder
It is important to note that Silverstein wasn't the sole leaseholder of the World Trade Center. Silverstein led a consortium of investors and lenders, including GMAC Commercial Mortgage, a General Motors subsidiary, Westfield America Inc., a shopping centre developer, and real estate investor Lloyd Goldman. All these entities had a say in deciding the insurance coverage amount for the properties, and each had a claim on the insurance payouts.
The World Trade Center was fully covered when it was bombed by terrorists in 1993, and insurers paid out an estimated $510 million in damages. There is no reason to assume that the WTC wasn't routinely covered against terrorist acts until Silverstein took over the lease in 2001. Upon signing the lease, Silverstein was required to insure the World Trade Center.
Silverstein was not solely responsible for the total dollar amount of the coverage ($3.55 billion) because that was the minimum demanded by his lenders, according to a 2002 report in The American Lawyer. Silverstein took his insurers to court after 9/11, asking for double the damages on the grounds that there were two separate attacks. He won and was awarded $4.55 billion.
Silverstein was the leaseholder of buildings One, Two, Four, and Five, and had the legal right to rebuild them, including One World Trade Center, which would later be designated as building One. Silverstein declared his intention to rebuild soon after the September 11 attacks, but he and his insurers became embroiled in a dispute over whether the attacks constituted one or two events under the terms of the insurance policy. A settlement was reached in 2007, with insurers agreeing to pay out $4.55 billion.
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Silverstein sued for two occurrences
Larry Silverstein, an American billionaire businessman, was at the center of a longstanding urban legend that he profited from the 9/11 attacks. Silverstein bought terrorism insurance two months before 9/11 and later collected double its value on the grounds that there were two attacks. Silverstein led a consortium of investors and lenders, including GMAC Commercial Mortgage, Westfield America Inc., and real estate investor Lloyd Goldman, and was not the sole leaseholder of the World Trade Center.
Upon signing the lease, Silverstein was obligated to insure the World Trade Center, and there was nothing suspicious about his purchasing an all-risk insurance policy that included terrorism coverage at that time. Silverstein was not solely responsible for the total dollar amount of the coverage, which was the minimum demanded by his lenders. After 9/11, Silverstein took the insurance company to court, claiming he should be paid double because there were two attacks.
The litigation began when Swiss Re filed a lawsuit in the U.S. District Court in Manhattan, asking for a declaration that the destruction of the twin towers constituted a single occurrence. Silverstein maintained that two planes destroying two buildings constituted two occurrences and mandated recovery for the value of both towers. The jury was initially unable to reach a verdict on Swiss Reinsurance but later found that the company was subject to the "one-occurrence" interpretation. Silverstein appealed the decision but lost.
The second trial resulted in a verdict that nine insurers were subject to the "two occurrences" interpretation and were liable for a maximum of double the face value of those policies ($2.2 billion). The total potential payout was capped at $4.577 billion for buildings 1, 2, 4, and 5. A settlement was reached in 2007, with insurers agreeing to pay out $4.55 billion, less than what Silverstein had sought. Silverstein also ran into disputes with other parties in the rebuilding effort, including the Port Authority.
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Silverstein's litigation lasted years
Larry Silverstein, an American billionaire businessman, was the leaseholder of the World Trade Center (WTC) during the September 11 attacks in 2001. He had taken over the lease of the WTC just months before the attacks and had purchased an all-risk insurance policy that covered terrorism. This was not unusual, as virtually all commercial insurance policies sold in the US before 9/11 covered terrorist incidents as the risk was considered remote.
After the attacks, Silverstein and his insurers became embroiled in a multi-year dispute over whether the attacks constituted one event or two under the terms of the insurance policy, which provided for a maximum of $3.55 billion coverage per event. Silverstein took the insurance company to court, arguing that he should be paid double because there were two separate attacks.
The litigation lasted for several years, with the first trial resulting in a verdict in April 2004. The jury found that ten of the insurers were subject to the "one occurrence" interpretation, limiting their liability to the face value of the policies. Three insurers were added to a second trial group, and the jury later found that one insurer, Swiss Reinsurance, was also subject to the "one-occurrence" interpretation. Silverstein appealed the Swiss Re decision but lost.
The second trial, in December 2004, found that nine insurers were subject to the "two occurrences" interpretation and were liable for a maximum of double the face value of those policies ($2.2 billion). The total potential payout was capped at $4.577 billion for buildings 1, 2, 4, and 5.
The dispute was finally settled in 2007, with insurers agreeing to pay out $4.55 billion, less than what Silverstein had sought. Silverstein also faced disputes with other parties during the rebuilding effort, including the Port Authority, with whom he reached an agreement in April 2006 to retain the rights to build three office towers.
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Frequently asked questions
Yes, Larry Silverstein took out an insurance plan that covered terrorism on the World Trade Center. He was the leaseholder of buildings One, Two, Four, and Five.
No, Silverstein led a consortium of investors and lenders, including GMAC Commercial Mortgage and Westfield America Inc., who all had a say in deciding the insurance coverage.
No, the awards have gone into the rebuilding of the WTC complex.
Yes, Silverstein retained the rights to build three office towers—150 Greenwich Street, 175 Greenwich Street, and 200 Greenwich Street.
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