Business Interruption Insurance Did Not Cover Airline’s Losses From September 11 Attacks

United Air Lines, Inc. v. Insurance Company of the State of Pennsylvania, 439 F.3d 128 (2nd Cir. Febuary 22, 2006) has been out for a month, but the first time I had a chance to read the opinion was over the weekend. It was published in the Federal Reporter last week. In the case, United argued its $25 million “Property Terrorism & Sabotage” policy with the defendant should cover certain losses United suffered in the September 11, 2001 terrorist attacks.
The policy covered business interruption losses only if the interruption resulted from damage to United’s business locations or to adjacent property. United sought recovery for all losses United suffered because of the government-ordered grounding of airline flights for a time following the attacks. The court said it did not need to decide whether the Pentagon and the World Trade Center were adjacent to United’s property, because United could not show its operations were shut down because of damage to these buildings, as opposed to fear of future attacks. The court granted summary judgment to the insurer.

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