United Airlines, Inc. v. The Insurance Company of the State of Pennsylvania

United Airlines, Inc. v. The Insurance Company of the State of Pennsylvania

On February 22, 2006, the Second Circuit affirmed the District Court's decision where MCW&G was awarded summary judgment on behalf of The Insurance Company of the State of Pennsylvania against a $25 million (policy limit) claim made by United Airlines.  United Airlines alleged that its $1.2 billion system-wide losses in the aftermath of 9/11 should be covered under the insurer's Property Sabotage and Terrorism policy. The policy required that the insured suffer "property damage" at an insured location resulting from "Terrorism," but UAL argued that its non-physical "economic" losses should be covered as well. In denying UAL's motion for summary judgment and granting State of Pennsylvania's cross-motion for summary judgment, the court ruled that "damage" as used in the policy must be interpreted to mean "physical damage." The court also denied UAL's claim under the policy's "civil authority" coverage, which had been premised on assertions that the Pentagon was "adjacent" to Reagan National Airport (which contained an insured location) and that the damage to the Pentagon was the cause of the "order of civil authority" closing the airports on 9/11.