World Trade Center (search) leaseholder Larry Silverstein (search) suffered a court defeat Thursday that means he won't get his $3.5 billion insurance policy paid twice over.

In a partial verdict, a federal jury found that the majority of the insurers, who hold more than $1 billion of the policy, are bound by a form that defined the Sept. 11 terrorism as one event.

It was the first of at least two trials that will ultimately decide how much insurance money will be available to rebuild ground zero. Development officials have said the amount recovered could control the pace of rebuilding.

Silverstein still could recover as much as $5.5 billion if he prevails in a future trial to decide whether — apart from the form binding many of the insurers — the destruction of the twin towers was two events for insurance purposes.

The verdict came just after the jury said in a note that it had reached a decision days ago on all except Swiss Re International Business Insurance Co. (search), the insurer with the largest stake in the policy, about $877 million.

Judge Michael Mukasey decided to accept the findings and to send the jury back to resume deliberating the Swiss Re issue.

The jury found in Silverstein's favor regarding three insurance companies that provided about $176 million of the insurance for the trade center.

If jurors find against Swiss Re, it will join those three companies and other insurers that provided nearly $1 billion in coverage in a second trial to determine whether they owe two payouts, one for each tower. A third phase would determine how much the insurers must pay.

Lawyers for several insurers that successfully argued they needed to issue only one payout said they were pleased by the verdict.

"We had a very clear and plausible story to tell," said Ken Erickson, who represented Lloyd's of London and other London insurers that carried about $719 million of the policy.

"This is a partial verdict," Silverstein spokesman Howard Rubenstein said. "We are awaiting the decision with respect to Swiss Re, the largest insurer in the World Trade Center coverage. We will have no further comment while the jury continues to deliberate."

The jury was scheduled to resume its deliberations Monday, but Mukasey dismissed one of the 11 jurors Thursday, saying she had requested to be excused because of a personal problem. Mukasey didn't disclose what the problem was or whether the juror was the same one who asked a courtroom aide to leave the trial earlier this week.

The partial verdict came after a 21/2-month trial that focused on which insurance policies applied at the trade center when the towers collapsed on Sept. 11, 2001.

Although the policy of the 13 insurers in this trial had not been finalized on Sept. 11, the insurers said they had signed temporary binders based on the terms of a form issued by Silverstein's broker, Willis Group Holdings Ltd.

An appeals court ruled last September that that form, known as a Wilprop, would define the Sept. 11 destruction of the trade center as one occurrence for insurance purposes.

In closing arguments last week, Silverstein attorney Herbert Wachtell argued that the Willis brokers had switched the 13 insurers over to another policy form issued by Travelers Property Casualty Corp. (search) in July 2001.

Wachtell said that Willis broker Timothy Boyd, who obtained insurance for Silverstein, either told representatives for the insurers they were switching to Travelers, or were not obligated to because some insurers waived the ultimate wording of the policy's form.

But insurers' attorneys, led by Barry Ostrager of Swiss Re, said that the Willis brokers could produce no e-mails or written notice to the insurers that a switch was being made.

The insurers also referred to a Sept. 12, 2001, fax by Silverstein's insurance manager of the Wilprop form to site owner Port Authority of New York and New Jersey (search) and a leading Silverstein lender as evidence that that was the insurance that applied at the time. Silverstein attorneys argued that the manager was distraught the day after the attacks and mistakenly didn't receive an e-mail attachment of the Travelers form, so he just faxed what he had in his office.

One Willis broker testified he had e-mailed the Travelers form to a Swiss Re underwriter. The underwriter testified that he received it, but didn't read it carefully because such a form had never been discussed with him.