Judge Narrows N.Y.-N.J. Port Authority’s World Trade Center Claim

The Port Authority of New York and New Jersey can collect insurance only for damage inflicted on two buildings of the World Trade Center site destroyed on Sept. 11, 2001, rather than for the entire complex, a U.S. District Court judge ruled.

The decision turned on whether the Port Authority’s insurance policies excluded the rest of the World Trade Center complex because the agency had leased it to developer Larry Silverstein, who had bought his own insurance.

Judge Barbara Jones, of U.S. District Court for the Southern District of New York, upheld what is known as the “Exclusion f” section of the policy, saying it “applies in the present case and removes the Silverstein property from coverage under the Port Authority insurance program.”

Under her ruling, the Port Authority, which owns the site, will be able to collect insurance only for one World Trade Center building, known as Building Number 6, and for the PATH train station, which is the trans-Hudson link with New Jersey.

The insurance money that the agency will get is a critical issue, partly because construction costs keep climbing and several projects have already been scaled back.

Jones also rejected the agency’s claim that she should not rule until Silverstein had rebuilt the complex. “Not only does the Port Authority fail to support this argument with citation to any case law, but this position is, in fact, contradicted by the controlling decisions on this issue,” she wrote.

Robert Skinner, a lawyer for Ropes & Gray in Boston who represented insurance market Lloyd’s of London, said the Port Authority still wants as much as $3 billion for the damage to Building Number 6 and the train system. Skinner, however, said the insurers believe the damages suffered were less than $1.5 billion.

In addition, the Port Authority’s $3 billion claim is partly based on its argument that the attacks were two separate events. Silverstein fought his insurers in court to get the attacks termed two occurrences. If Jones follows the precedents set by other courts who ruled on Silverstein’s claims, she will settle this question by how the different insurers wrote their policies, according to Skinner.

The other insurers included in the decision were: GlobalRisks UK Ltd, Copenhagen Reinsurance Co Ltd, Great Lakes Reinsurance (UK) PLC, Houston Casualty Co., QBE International Insurance Ltd, Sirius International Insurance, Wurttembergische Versicherung AG, Zurich Specialities London Ltd, Allianz Global Risks US Insurance Co.