Twin Towers Insurance Claim
Discussion
Turfy said:
What is the crux of this case? Was someone profiteering or was someone trying to wriggle out of the insurance payment? Or a bit of both?
Say you have 2 houses, both worth £500K. Now the risk is more than having 1 house worth £500k, as you have 2 houses that something could happen to. But the risk is less than someone with a £1m house, because the biggest loss insurers could face is £500K, not £1m.Edited by Turfy on Tuesday 16th April 11:27
So you insure them both for £500K each, on a stop loss basis whereby you agree to a max payout of £500K (or one incident) and the premium is set somewhere between someone with a £1m house and someone with 1 £500K house. If 1 house burns down, you need to buy another £500K of cover and pay more premium to protect the 2nd house.
That's just what the owners of the twin towers did. Insured both towers, but capped the payout at 1 incident.
Now if a meteor had taken out both your houses (or both towers), then you would have got paid for both, as it's only one incident. The owners tried to claim the plane strikes were 1 incident/. The court disagreed. Bottom line is the insurers only received the premium based on one tower being destroyed at any one time.
TwigtheWonderkid said:
Turfy said:
What is the crux of this case? Was someone profiteering or was someone trying to wriggle out of the insurance payment? Or a bit of both?
Say you have 2 houses, both worth £500K. Now the risk is more than having 1 house worth £500k, as you have 2 houses that something could happen to. But the risk is less than someone with a £1m house, because the biggest loss insurers could face is £500K, not £1m.Edited by Turfy on Tuesday 16th April 11:27
So you insure them both for £500K each, on a stop loss basis whereby you agree to a max payout of £500K (or one incident) and the premium is set somewhere between someone with a £1m house and someone with 1 £500K house. If 1 house burns down, you need to buy another £500K of cover and pay more premium to protect the 2nd house.
That's just what the owners of the twin towers did. Insured both towers, but capped the payout at 1 incident.
Now if a meteor had taken out both your houses (or both towers), then you would have got paid for both, as it's only one incident. The owners tried to claim the plane strikes were 1 incident/. The court disagreed. Bottom line is the insurers only received the premium based on one tower being destroyed at any one time.
Antony Moxey said:
TwigtheWonderkid said:
Turfy said:
What is the crux of this case? Was someone profiteering or was someone trying to wriggle out of the insurance payment? Or a bit of both?
Say you have 2 houses, both worth £500K. Now the risk is more than having 1 house worth £500k, as you have 2 houses that something could happen to. But the risk is less than someone with a £1m house, because the biggest loss insurers could face is £500K, not £1m.Edited by Turfy on Tuesday 16th April 11:27
So you insure them both for £500K each, on a stop loss basis whereby you agree to a max payout of £500K (or one incident) and the premium is set somewhere between someone with a £1m house and someone with 1 £500K house. If 1 house burns down, you need to buy another £500K of cover and pay more premium to protect the 2nd house.
That's just what the owners of the twin towers did. Insured both towers, but capped the payout at 1 incident.
Now if a meteor had taken out both your houses (or both towers), then you would have got paid for both, as it's only one incident. The owners tried to claim the plane strikes were 1 incident/. The court disagreed. Bottom line is the insurers only received the premium based on one tower being destroyed at any one time.
I'm not in the insurance game but am in banking
Antony Moxey said:
How is the risk for a £1M house more than the risk for a £500k house? Surely the risks are the same, which isn’t the same as the potential losses being the same?
Risk is the expected value of an undesirable outcome. It's likelihood x impact or probability x expected cost. So for a similar likelihood increased impact = increased risk. TwigtheWonderkid said:
Say you have 2 houses, both worth £500K. Now the risk is more than having 1 house worth £500k, as you have 2 houses that something could happen to. But the risk is less than someone with a £1m house, because the biggest loss insurers could face is £500K, not £1m.
So you insure them both for £500K each, on a stop loss basis whereby you agree to a max payout of £500K (or one incident) and the premium is set somewhere between someone with a £1m house and someone with 1 £500K house. If 1 house burns down, you need to buy another £500K of cover and pay more premium to protect the 2nd house.
That's just what the owners of the twin towers did. Insured both towers, but capped the payout at 1 incident.
Now if a meteor had taken out both your houses (or both towers), then you would have got paid for both, as it's only one incident. The owners tried to claim the plane strikes were 1 incident/. The court disagreed. Bottom line is the insurers only received the premium based on one tower being destroyed at any one time.
TwigSo you insure them both for £500K each, on a stop loss basis whereby you agree to a max payout of £500K (or one incident) and the premium is set somewhere between someone with a £1m house and someone with 1 £500K house. If 1 house burns down, you need to buy another £500K of cover and pay more premium to protect the 2nd house.
That's just what the owners of the twin towers did. Insured both towers, but capped the payout at 1 incident.
Now if a meteor had taken out both your houses (or both towers), then you would have got paid for both, as it's only one incident. The owners tried to claim the plane strikes were 1 incident/. The court disagreed. Bottom line is the insurers only received the premium based on one tower being destroyed at any one time.
This is a wonderful and simple way of explaining something that had puzzled me too. Not being that bright at times your post explained it in a way I grasped without getting confused
Thanks
TwigtheWonderkid said:
That's just what the owners of the twin towers did. Insured both towers, but capped the payout at 1 incident.
Now if a meteor had taken out both your houses (or both towers), then you would have got paid for both, as it's only one incident. The owners tried to claim the plane strikes were 1 incident/. The court disagreed. Bottom line is the insurers only received the premium based on one tower being destroyed at any one time.
Is it not the other way round? A single incident only pays out for rebuilding one house (this seems to be what the Telegraph article says) & it would take two different incidents to get paid for both. The article also says that the owner of the towers is claiming it was two incidents & hence should get paid for both, but the court disagreed.Now if a meteor had taken out both your houses (or both towers), then you would have got paid for both, as it's only one incident. The owners tried to claim the plane strikes were 1 incident/. The court disagreed. Bottom line is the insurers only received the premium based on one tower being destroyed at any one time.
Two aircraft - one incident, one payout (as the court ruled)
Two meteors - one incident (might have to be on the same night though?)
One aircraft & one meteor - two incidents, double payout.
Graveworm said:
Antony Moxey said:
How is the risk for a £1M house more than the risk for a £500k house? Surely the risks are the same, which isn’t the same as the potential losses being the same?
Risk is the expected value of an undesirable outcome. It's likelihood x impact or probability x expected cost. So for a similar likelihood increased impact = increased risk. Mr Pointy said:
TwigtheWonderkid said:
That's just what the owners of the twin towers did. Insured both towers, but capped the payout at 1 incident.
Now if a meteor had taken out both your houses (or both towers), then you would have got paid for both, as it's only one incident. The owners tried to claim the plane strikes were 1 incident/. The court disagreed. Bottom line is the insurers only received the premium based on one tower being destroyed at any one time.
Is it not the other way round? A single incident only pays out for rebuilding one house (this seems to be what the Telegraph article says) & it would take two different incidents to get paid for both. The article also says that the owner of the towers is claiming it was two incidents & hence should get paid for both, but the court disagreed.Now if a meteor had taken out both your houses (or both towers), then you would have got paid for both, as it's only one incident. The owners tried to claim the plane strikes were 1 incident/. The court disagreed. Bottom line is the insurers only received the premium based on one tower being destroyed at any one time.
Two aircraft - one incident, one payout (as the court ruled)
Two meteors - one incident (might have to be on the same night though?)
One aircraft & one meteor - two incidents, double payout.
techiedave said:
TwigtheWonderkid said:
Say you have 2 houses, both worth £500K. Now the risk is more than having 1 house worth £500k, as you have 2 houses that something could happen to. But the risk is less than someone with a £1m house, because the biggest loss insurers could face is £500K, not £1m.
So you insure them both for £500K each, on a stop loss basis whereby you agree to a max payout of £500K (or one incident) and the premium is set somewhere between someone with a £1m house and someone with 1 £500K house. If 1 house burns down, you need to buy another £500K of cover and pay more premium to protect the 2nd house.
That's just what the owners of the twin towers did. Insured both towers, but capped the payout at 1 incident.
Now if a meteor had taken out both your houses (or both towers), then you would have got paid for both, as it's only one incident. The owners tried to claim the plane strikes were 1 incident/. The court disagreed. Bottom line is the insurers only received the premium based on one tower being destroyed at any one time.
TwigSo you insure them both for £500K each, on a stop loss basis whereby you agree to a max payout of £500K (or one incident) and the premium is set somewhere between someone with a £1m house and someone with 1 £500K house. If 1 house burns down, you need to buy another £500K of cover and pay more premium to protect the 2nd house.
That's just what the owners of the twin towers did. Insured both towers, but capped the payout at 1 incident.
Now if a meteor had taken out both your houses (or both towers), then you would have got paid for both, as it's only one incident. The owners tried to claim the plane strikes were 1 incident/. The court disagreed. Bottom line is the insurers only received the premium based on one tower being destroyed at any one time.
This is a wonderful and simple way of explaining something that had puzzled me too. Not being that bright at times your post explained it in a way I grasped without getting confused
Thanks
Antony Moxey said:
How is the risk for a £1M house more than the risk for a £500k house? Surely the risks are the same, which isn’t the same as the potential losses being the same?
From an insurance viewpoint, part of the risk is the potential maximum payout. But yes, a £100K house in a flood zone could be a bigger overall risk that a £1m house on a hill, and attract a higher premium. . techiedave said:
TwigtheWonderkid said:
Say you have 2 houses, both worth £500K. Now the risk is more than having 1 house worth £500k, as you have 2 houses that something could happen to. But the risk is less than someone with a £1m house, because the biggest loss insurers could face is £500K, not £1m.
So you insure them both for £500K each, on a stop loss basis whereby you agree to a max payout of £500K (or one incident) and the premium is set somewhere between someone with a £1m house and someone with 1 £500K house. If 1 house burns down, you need to buy another £500K of cover and pay more premium to protect the 2nd house.
That's just what the owners of the twin towers did. Insured both towers, but capped the payout at 1 incident.
Now if a meteor had taken out both your houses (or both towers), then you would have got paid for both, as it's only one incident. The owners tried to claim the plane strikes were 1 incident/. The court disagreed. Bottom line is the insurers only received the premium based on one tower being destroyed at any one time.
TwigSo you insure them both for £500K each, on a stop loss basis whereby you agree to a max payout of £500K (or one incident) and the premium is set somewhere between someone with a £1m house and someone with 1 £500K house. If 1 house burns down, you need to buy another £500K of cover and pay more premium to protect the 2nd house.
That's just what the owners of the twin towers did. Insured both towers, but capped the payout at 1 incident.
Now if a meteor had taken out both your houses (or both towers), then you would have got paid for both, as it's only one incident. The owners tried to claim the plane strikes were 1 incident/. The court disagreed. Bottom line is the insurers only received the premium based on one tower being destroyed at any one time.
This is a wonderful and simple way of explaining something that had puzzled me too. Not being that bright at times your post explained it in a way I grasped without getting confused
Thanks
Antony Moxey said:
Fair enough. I’d always taken risk to mean the chance of an undesirable outcome occurring, I guess insurance defines risk differently.
Nope, it’s not just insurance. In the engineering or safety case world, risk = probability x consequence. If either the probability or consequence is really low, then so is the risk.
I feel for the owner. Prior to 9/11 who would have thought both towers could be destroyed. One tower, in a fire, perhaps. So the towers were insured in the way anyone would have insured them.
But if the insurer had to pay for 2, I'd feel for them. Bottom line is they never got enough premium to cover the risk of 2 going down. They never took on that risk and weren't paid for it.
I tell who did take a massive financial hit that day, and that's the death in service (DIS) insurance providers.
DIS cover is cheap. That's why so many of us get it, 4 times annual salary. Sounds really generous and a good perk. But in reality, it rarely pays out. Most people don't die before retirement, and most of those who do die of something like cancer, where they're off work for a few years prior to death and have been long since let go. DIS cover just pays for those employees killed in car crashes, heart attacks and the like. Random accidents.
But suddenly, on 9/11, they are faced with paying out for multiple employees, many of whom were on high salaries. One firm lost about 80 staff on that day.
But if the insurer had to pay for 2, I'd feel for them. Bottom line is they never got enough premium to cover the risk of 2 going down. They never took on that risk and weren't paid for it.
I tell who did take a massive financial hit that day, and that's the death in service (DIS) insurance providers.
DIS cover is cheap. That's why so many of us get it, 4 times annual salary. Sounds really generous and a good perk. But in reality, it rarely pays out. Most people don't die before retirement, and most of those who do die of something like cancer, where they're off work for a few years prior to death and have been long since let go. DIS cover just pays for those employees killed in car crashes, heart attacks and the like. Random accidents.
But suddenly, on 9/11, they are faced with paying out for multiple employees, many of whom were on high salaries. One firm lost about 80 staff on that day.
Am I correct in thinking that both towers were insured on the one policy but if each tower had been insured under a separate policy then the payout would have been on both policies?
Using Twigs analogy, I would be paid out £1M for my 2 x £500k houses as the two policies are not linked.
Using Twigs analogy, I would be paid out £1M for my 2 x £500k houses as the two policies are not linked.
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