## Facts

- Shortly before September 11, 2001, World Trade Center Properties, L.L.C. and related entities obtained leasehold interests in the World Trade Center complex and arranged a large first-party property insurance program through their broker.
- The insurance placement process involved temporary insurance contracts commonly used in the market, often issued as “binders,” while final policy wording remained under negotiation.
- Travelers Indemnity Company agreed to participate in the program and issued a binder dated July 19, 2001, which was the effective date of Travelers’ coverage.
- At the time of the September 11 attacks, Travelers had not issued a final, fully executed policy to the insureds; the parties’ relationship was governed by the binder and whatever terms it incorporated.
- A specimen policy form known as the “WilProp” form circulated during underwriting and contained a cause-based definition of “occurrence.”
- Travelers, unlike some participating insurers, submitted its own specimen form in response to the placement materials, and that Travelers form did not define the term “occurrence.”
- On September 11, 2001, two hijacked airplanes struck Towers One and Two, producing catastrophic property loss at the insured location.
- After the attacks, the insureds sought payment under the Travelers coverage and argued that the terms of the policy Travelers issued on September 14, 2001 should govern the September 11 losses.
- Travelers disagreed, maintaining that the July 19 binder controlled the parties’ rights for a loss occurring before the September 14 policy was issued.
- The dispute was part of consolidated federal litigation over which policy forms applied to various insurers and how “occurrence” issues should be handled for insurers whose binders did not clearly use the WilProp wording.

## Issues

1. Whether, under New York law, the July 19, 2001 binder constituted an enforceable insurance contract governing Travelers’ coverage for the September 11 losses, notwithstanding that Travelers issued a policy on September 14, 2001.
2. Whether the terms of Travelers’ binder incorporated the broker’s WilProp specimen form (including its definition of “occurrence”) or instead reflected Travelers’ own submitted form and agreed binder terms.
3. Whether disputes about which form governed Travelers’ coverage and how to treat “occurrence” (where the governing form did not define it) were for the court to decide as matters of contract interpretation or for a jury as fact questions.

## Decision

- The Second Circuit held that the binder in effect on September 11 was a present, enforceable contract of insurance and supplied the governing contractual framework for a loss occurring before issuance of the later policy.
- The court agreed that a subsequently issued policy did not automatically replace or retroactively supply disputed terms for the earlier binder period absent proof that those later terms were part of the parties’ agreement at the time of binding.
- The court upheld the district court’s treatment of policy-form questions—what Travelers actually agreed to when it bound coverage, and whether WilProp wording was part of that agreement—as questions for the judge based on ordinary contract principles.
- Consistent with the view that Travelers’ binding materials did not clearly incorporate the WilProp “occurrence” definition (and that Travelers’ submitted form did not define “occurrence”), the court allowed the “one occurrence vs. two occurrences” question, as to Travelers, to proceed under the governing terms and applicable New York rules rather than treating WilProp as automatically controlling.
- The court largely affirmed the district court’s rulings that distinguished among insurers based on what their binders and submissions showed they had actually agreed to.

## Legal Principles

- A binder can be a fully enforceable contract of insurance under New York law, even though it is temporary and issued before the final policy is delivered.
- The terms of a binder depend on the parties’ actual agreement at the time coverage is bound; a broker-circulated specimen form is not included by default.
- A later-issued policy does not automatically change the contractual terms for a loss that occurred during the binder period unless the later wording reflects terms mutually agreed to when binding occurred.
- Courts decide contract-formation and contract-interpretation questions about what writings govern and what terms were agreed upon; fact disputes that remain after the governing language is set may be left for the jury.
- When an insurance form governing a loss does not define a term such as “occurrence,” the meaning and application may depend on New York interpretive rules and, in some settings, fact findings rather than a single predetermined definition.

## Conclusion

In *World Trade Center Properties, L.L.C. v. Travelers Indemnity Co.*, 345 F.3d 154 (2d Cir. 2003), the Second Circuit treated Travelers’ July 19, 2001 binder as the operative insurance contract for the September 11 losses and rejected the idea that a policy issued on September 14 automatically supplied controlling terms for the earlier loss; because the governing agreement did not clearly incorporate the WilProp specimen wording and Travelers’ submitted form did not define “occurrence,” the court affirmed the district court’s approach of deciding the governing-form question as a matter of law while leaving any remaining occurrence-related application questions to be resolved under the applicable terms and New York law.


World Trade Center Properties, L.L.C. v. Travelers Indemnity Co., 345 F.3d 154 (2003)