Westfield America Trust resolves dispute with Zurich Insurance
Countries: United States
Westfield America Trust announced today it had resolved a dispute with Zurich Insurance over supplementary insurance on the retail component of the World Trade Center.
The insurance in question is separate from the US$3.5 billion “per occurrence” primary insurance policies over the World Trade Center.
The dispute centred on the general property insurance provided by Zurich which covers Westfield America’s entire shopping centre portfolio and, Westfield believed, automatically covered new properties provided notice of their inclusion in the portfolio was provided to the insurer within 90 days of the acquisition. Formal notice of Westfield America’s acquisition of the retail component of the World Trade Center had been provided to Zurich on September 14, more than a month before the 90-day deadline expired.
In November 2001, Zurich filed a complaint against Westfield America in the Federal Court in New York, disputing Westfield America’s claim for supplementary insurance cover.
As a result of the resolution announced today the court proceedings have been voluntarily dismissed and the parties have agreed that coverage for the World Trade Center loss shall be subject to binding arbitration. In the event Zurich is found to be obligated to provide such coverage, such obligation shall not exceed US$55 million.
It is also agreed between the parties that the Zurich policy, which took effect as part of Westfield’s annual renewal of its insurance policies on 1 July 2001, is a general property insurance policy covering Westfield America’s entire portfolio and contains no terrorism exclusion.
Westfield has separate primary coverage for its interest in the 99-year lease on the retail component of the World Trade Center under the US$3.5 billion ‘per occurrence’ property and business interruption insurance policies provided by a consortium of insurance companies with respect to Westfield and Silverstein’s interests in the World Trade Center.
Westfield remains confident that it has adequate insurance coverage and that the loss of the World Trade Center will not have a material impact on the distribution of Westfield America Trust. Westfield’s investment was fully insured for loss of both capital and income, including for terrorist attack.