Breaking will be offline for scheduled maintenance Saturday May 8 3 AM US EST to 12 PM EST. We apologize for the inconvenience.


Thank you for sharing!

Your article was successfully shared with the contacts you provided.

ST. PAUL, MN-Is it war or is it terrorism — that is a $30-billion question hanging over the heads of property owners in New York and insurance companies all over the country.Damage due to war is an almost universal exclusion in property insurance policies; yet acts of terrorism are different from acts of war and cannot be excluded fromcoverage.

Insurance groups, including the International Risk Management Institute, have beenclear in saying that. “It’s a very interesting issue,” says Rich Thomas, a St. Paul attorney specializing in insurance coverage issues.

Property-casualty insurance companies have been less eager to comment on the subject. For instance, The St. Paul Cos., a major commercial property liability insurer with an undetermined exposure to the World Trade Center calamity, says it simply has not addressed the war exclusion issue. The company has focused on helping its clients and its own New York operations recover from the attack, says David Monfried, a spokesman for the St. Paul-based insurer.

Yet there are indications that they are ready to pay, says Bob Hartwig, chief economist for the Insurance Information Institute. In 1993, insurers paid $510 million in insured losses as a result of the World Trade Center bombing, he says.

Insurance coverage attorneys think the issue will come up — either in private talks between insurers and clients, or in court.

Tim Tobin, a Minnetonka, MN attorney who specializes in insurance coverage, says a client has already asked him about the war exclusion issue. He declined to identify or describe the client.

The issue is what constitutes “war” under the terms of the insurance policies, Tobin says.

On the one hand, the scale of the attack and the huge loss of life and mass destruction in the attacks has led some, including President George W. Bush, to declare it an “act of war.”

But war is “open armed conflict between countries or between factions within the same country,” says Webster’s New World Dictionary. Tuesday’s attack would appear not to fit this definition unless it can be shown that another country was behind it or that the attackers are a faction of U.S. citizens.

Tobin predicts the war exclusion issue will ultimately have to be sorted out by courts. Some insurance and reinsurance companies may be pushed into insolvency by their exposure to the incident, and will feel obligated to push their claim. Other insurers have already said they would “owe it” to their shareholders to pursue this argument, especially if some of their peers do so.

But Thomas disagrees. He anticipates the issue will be raised privately by insurers and may lead to some compromise, but he doubts it will ever to trial. After all, the public would poorly receive such a move by insurers.

“There may be litigation,” Thomas says. “But if I had to pick, I would rather be arguing for the insured than the insurer.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join now!

  • Free unlimited access to's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including and

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.