The collapse of Maryland's Francis Scott Key Bridge is a multi-layered tragedy. It is a profound and personal loss for the families and friends of those who have died or are presumed dead. This is an economic nightmare for businesses that rely on the Port of Baltimore.
And for federal courts, it will soon be a balancing act between funds and facts, with networks of insurance companies expected to foot at least part of the bill.
The disaster occurred early Tuesday morning when a cargo ship lost power and crashed into the Francis Scott Key Bridge in Baltimore. Eight people were on the highway bridge when it collapsed. Two people were rescued. Two more bodies were discovered, and four others remain missing and presumed dead.
The wreckage could close the Port of Baltimore, a major shipping port, and cost the region's economy hundreds of millions of dollars in lost labor income alone over the next month, according to economic analysis firm Implan.
A report by credit rating agency Morningstar DBRS said the sinking could become the largest marine insurance loss in history, surpassing the $1.5 billion record for the Costa Concordia cruise ship that sank off the coast of Italy in 2012. We predict that there will be. Morningstar DBRS estimates that total insured losses from the Baltimore disaster could range from $2 billion to $4 billion.
The costs, legal claims, and insurance companies that pay are as follows:
What are the legal claims?
In federal court, the loss of life and property damage will be reduced to a question of amount and fact. In other words, was there some kind of negligence on the part of the people or companies that owned and operated the ship? Was someone else partially responsible? How much would it cost to replace the bridge and financially enrich the families of the victims?
Insurers end up paying at least some, if not all, of the total cost.
Enrique Serna, a lawyer who specializes in representing migrant workers and people injured on the job, said his office was contacted by some of the victims' families shortly after the collapse, but he has not yet represented them. He said no. The workers filling the bridge holes came from El Salvador, Honduras, Guatemala and Mexico, some of whom had been here for decades.
Mr Serna said litigation was inevitable and marine insurance companies would soon seek a “limitation of liability”, asking a judge to cap the amount of damages they could be ordered to pay. Victims must act quickly to ensure that the limit is not too low.
“What happens is it's a race against time to see when you can file a claim,” Serna said.
What about the economic costs?
Attorney Thomas Schoenbaum, a maritime law expert and professor at the University of Washington, said that despite significant economic damage, affected companies cannot sue the ship's owner or operator.
“The bad news about this in general is that under maritime law, damages that are purely economic losses cannot be recovered. “Maritime law provides that there is no recovery unless there is some additional physical damage,” he said.
The only exception is for losses from pollution such as oil spills, he said, and bridge debris does not count as pollution under maritime law.
Bernard Sommer, owner of Charm City Warehouse, a Baltimore-based company that serves shipping companies that need to store cargo containers, faces significant losses as long as the vessels are diverted to other ports. I predict that will happen.
“If they reopen within 30 days, we're going to lose 60 to 90 days of business. And doing that within 30 days is pretty quick,” he said. I did. “There will be no service to the Port of Baltimore until this channel is open and shipping.”
Sommer said he has not yet contacted his insurance company to see if it will cover losses related to the Port of Baltimore closure.
“What if the building catches fire and we can't open or something like that happens?” Yes, that's covered. But I don’t know if something like this will be covered,” he said. “That's hard to say. When you sign up for insurance, they give you all your coverage on one page. And then there's 45 pages of everything they're not going to cover. Masu.”
On Friday, Atlantic Maritime Ship Supply Co. initially had to send a truck to Newport News, Virginia, to service the ship bound for Baltimore. Owner Edward Dryer hasn't checked his insurance yet and is waiting to see if his business will be significantly affected.
He expects ports to reopen in stages over weeks rather than months.
“Let's be optimistic that they can at least partially open the waterway reasonably quickly,” Dryer said.
Experts say replacing the bridge could cost more than $400 million.
What about marine insurance companies?
Boats and other vessels often carry more than one type of insurance. Insurance often covers damage to the ship's hull and machinery, and may also cover cargo carried by the ship.
But for other very costly losses, such as large-scale environmental damage or disasters such as bridge collapses, owners of large vessels turn to something called “protection and indemnity” or P&I insurance.
P&I insurance is provided by 'clubs', which are made up of several policyholder-owned insurance companies. Club members put money into a pool of funds that can be used to pay catastrophic insurance claims. The idea is to share the risks associated with large-scale disasters and ensure that no company bears the risk alone.
Insurance Clubs may also purchase their own insurance to cover expenses that are too large for the pool to handle alone. This is called “reinsurance.” It is the insurance that the Club pays for first and then the second payer is the 'reinsurance'.
The Britannia P&I Club insures ships involved in sinkings. The London-based club is also part of a larger international group, the P&I Club, and is likely to be required to cover expenses beyond pre-arranged amounts. Reinsurance companies may also receive a cut of the tab.
