Who ends up holding the bag for the Baltimore bridge collapse?



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The crash of a massive cargo ship into Baltimore's Francis Scott Key Bridge will likely result in billions of dollars in liability claims. Marine insurance companies will continue to bear most of the costs.

With the various owners and companies involved – and even some maritime laws from before the Titanic sank – untangling the web, figuring out who owed what, and recovering from both lost lives and physical structures. Resolving the resulting losses will be complex.

“The claims are likely to exceed a billion dollars,” said John Miklus, president of the American Institute of Marine Underwriters. “The lawsuit will last for years.”

dali is ship Owned by Grace Ocean Pvt.A Singapore based company, and insured by Britannia Protection & Indemnity Club.

Britannia International is one of dozens of marine insurance member clubs under the Group of P&I Clubs, an association that provides marine liability coverage for 90% of ocean freight traffic and aggregates liability claims among members. (The P&I Club's international group did not respond to CNN's request for comment.)

These insurance companies are backed by their own insurance companies – a type of business known as a reinsurer.

According to Moody's analyst Brendan Holmes, about 80 different reinsurers provide approximately $3 billion of coverage to Dali's insurers. Because losses will be spread across so many insurers, he said, it is unlikely that any one company will go bankrupt or insurance prices will skyrocket.

These P&I insurance clubs collectively aggregate losses, but they also purchase “a comprehensive reinsurance program,” Miklus told CNN.

“So, when we start talking about losses of a billion or more, that's spreading throughout the global reinsurance market,” Miklus said.

It is still too early to know the final bill for damage and reconstruction.

The bridge alone could cost more than $1.2 billion, said Insurance Information Institute spokeswoman Loretta Worters. Then there will certainly be huge liability lawsuits, medical costs for survivors, cleanup costs and more, he said.

Cleaning up and rebuilding damage to cars and debris will also be included in the total, Worters said.

Miklus cited an insurance payout of nearly $1.5 billion after the Costa Concordia cruise ship ran aground on an Italian island in 2012, one of the highest insurance claims in recent memory. “I expect it will rival that kind of claim in terms of total cost,” he said.

Insurers face claims worth more than $3 billion, Bloomberg reported, citing a note from Barclays analysts. Barclays declined to comment to CNN.

while cast Owned by Grace Ocean Pvt.It was chartered by Danish shipping giant Maersk when it boarded the bridge on Tuesday morning.

When it comes to maritime law, “all liability ends up with the shipowner, which would be a Singapore company,” said Martin Davis, director of the Center for Maritime Law at Tulane University. “The Danish company Maersk, which owns all the cargo on the ship, is not liable,” Davis said.

But thanks to a statute dating back to 1851, the shipowner has the ability to significantly limit the extent of his liability in this case.

The statute – which was used by the owners of the RMS Titanic along with other examples – could limit the ship's owner's liability based on what the wreck was worth after the crash.

Of course, the bridge will almost certainly be rebuilt, no matter how much the insurance payment is made. President Joe Biden said Tuesday that the federal government will pay the cost of rebuilding the Francis Scott Key Bridge, though it was not immediately clear where that money would come from or how much that effort would cost.

“It is my intention that the federal government pay the entire cost of rebuilding that bridge,” Biden said Tuesday. “And I hope Congress will support my effort,” he said, adding that the process “will take some time.”

The president's comments come especially amid his re-election campaign. Some funding could come from the Federal Highway Administration, as well as the Infrastructure Investment and Jobs Act passed under Biden that provides grants to improve the nation's bridges. But it also may require additional funding from Congress.

While the ship hitting the bridge is likely to disrupt businesses in the area, Davis says the full economic loss cannot be recovered from shipowners in a maritime damage claim.

Davis cited a 1927 Supreme Court decision, Robbins Dry Dock and Repair Co. v. Flint, saying, “Not all losses due to business interruption, which will be significant, will be recovered from the ship.”

Davis said, “For example, I believe there is a Domino sugar refinery right next to the bridge that uses it all the time, and that will result in significant economic losses that will not be recouped.”

But people who have lost family members or who have been injured in an accident are likely to have their claims successful.

“But beyond that, the economic impact of what's happened will be huge, but it won't be offset by the ship,” Davis said.

Meanwhile, Maryland lawmakers are drafting an emergency bill to provide income replacement for Port of Baltimore workers affected by the bridge collapse. “The cost of lives lost yesterday is heavy and tragic,” Maryland state Senator Bill Ferguson said in a statement. post on x, “The damage to the economic and stability of the thousands of people who will be affected in the coming days cannot be underestimated.”




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