A Sneak Peek at the Baltimore's Francis Scott Key Bridge Debacle: Who Pays and How Much?
Collapsed Baltimore Bridge Insurer Agrees toShell Out $350 Million Compensation
In a twist of unfortunate events, Chubb, the insurer of Baltimore's iconic Francis Scott Key Bridge, is preparing to shell out a hefty $350 million to Maryland, less than a month after the bridge crumpled. This payout could set the stage for the prolonged legal row over who should foot the bill for the catastrophe.
The bridge's collapse might result in insured losses totalling between $2 billion and $4 billion, surpassing the $1.5 billion loss incurred by the Costa Concordia disaster of 2012. The Chartered DALI cargo ship, operated under Maersk, left Baltimore on March 26 destined for Sri Lanka. It seemingly encountered a power loss before colliding with one of the bridge's pillars, leading to the bridge's swift collapse. Tragically, six construction workers lost their lives, and one of the nation's significant ports was shut down.
Henry Daar, property claims head for WTW, the bridge's broker, anticipates the approval of the payment in weeks. This payment will max out Maryland's coverage for the bridge and will also offer some business-interruption coverage for the Port of Baltimore, which is currently losing about $88 million in tolls annually due to the bridge's closure, according to Daar.
Daar commended Chubb for acknowledging that the incident is likely to be a full-limits loss. "Chubb deserves applause for recognizing this will clearly be a full-limits loss," Daar said. "They could spend millions on accountants and adjusters over the next few years, or they could pay the claim."
Arguably, Chubb is expected to support Maryland in suing DALI's owner, Grace Ocean Private, and the ship's operator, Synergy Marine Group. These companies have filed a petition to cap their potential damages at $43.6 million. If approved, this would drastically reduce the estimated total insured loss.
In response to the tragedy, the City of Baltimore and a local business have sued Synergy and Grace Ocean, citing negligence. The FBI has launched a criminal probe, while the National Transportation Safety Board investigates the incident. The bridge's collapse paralyzed vessel traffic through Baltimore's port, which handled 52.3 million tons of foreign cargo worth $80 billion in 2023, playing a vital role in auto and energy industries' supply chains.
By the end of May, the U.S. Army Corps of Engineers anticipates reopening the port's permanent 700-foot-wide, 50-foot-deep channel, following the closure of more than $6 billion of cargo monthly for each month the port remains idle.
Meanwhile, more than 50 lawsuits have been filed in the aftermath of the accident, including wrongful death claims by the families of the six construction workers who perished. The exact outcomes of the lawsuits and potential insurance payouts are still unclear, with several cases potentially stretching until 2026.
Nevertheless, community support has stepped in to alleviate the suffering of victims' families and seafarers, with the Archdiocese of Baltimore raising substantial funds to aid those impacted by the disaster.
This article first appeared on Quartz.
A Quick Glance at the Legal and Financial Landscape:
- Legal Proceedings: Over 50 lawsuits have been filed against Synergy Marine Group and Grace Ocean Private, with wrongful death claims making up a significant portion.
- Liability Limits: The ship owners have filed a petition to cap their potential damages at roughly $43.7 million. However, if courts reject this cap, payouts could significantly exceed this limit.
- Federal Funding: The U.S. government has agreed to cover the reconstruction costs of approximately $1.7 billion. This pledge could influence how Maryland recovers costs from the involved parties.
- Insurance and Payouts: Insurance payouts or settlements might be influenced by liability caps and legal outcomes. Resolutions of lawsuits and potential payouts could take several years to resolve.
- Community Support: The Archdiocese of Baltimore has raised funds to support families of victims and seafarers impacted by the accident.
- Chubb, the insurer of Baltimore's iconic Francis Scott Key Bridge, may face legal action from Maryland as they prepare to pay a reported $350 million due to the bridge's collapse.
- Chubb is expected to support Maryland in suing DALI's owner, Grace Ocean Private, and the ship's operator, Synergy Marine Group, as these companies have petitioned to cap their potential damages at approximately $43.6 million.
- If courts reject the cap on potential damages for Grace Ocean Private and Synergy Marine Group, payouts could significantly exceed this limit.
- In addition to legal proceedings, the Archdiocese of Baltimore has stepped in to provide support for victims' families and seafarers affected by the disaster, raising substantial funds to aid those impacted by the accident.
