Baltimore Bridge Collapse: Key Insurance Considerations for Impacted Businesses

The catastrophic collapse of the Baltimore Francis Scott Key Bridge resulted in the tragic loss of life, severed part of Interstate 695, and shut down one of the busiest ports in the United States. The disaster could become one of the costliest insured maritime events in history.

Businesses that depend on the impacted transportation infrastructure are facing significant financial losses. The White House’s Supply Chain Disruptions Task Force, government agencies, and global markets are assessing the regional, national, and international supply chain disruptions.

Multiple industries are impacted. The Port of Baltimore ranks first among US ports for volume of autos and light trucks, roll on/roll off heavy farm and construction machinery, imported sugar, and imported gypsum; ninth for foreign cargo handled; and ninth for total foreign cargo value. The port is also the second-largest exporting hub for coal in the United States, accounting for 28% of total coal exports in 2023. Over the last five years, the top recipient of US steam coal shipped from the Port of Baltimore has been India, and of metallurgical coal, countries such as Japan and China.

Businesses affected by the bridge collapse and its aftermath should take immediate steps to carefully document their losses, analyze their insurance policies with coverage counsel to determine what potential coverages are available for their losses and exposures, and consider relevant conditions, which will often require a business to promptly notify their insurers in order to preserve all rights to maximize recovery for their losses.

Insurance is a key asset for impacted businesses and recent comments from the chair of Lloyd’s of London (Bruce Carnegie-Brown), where he stated “[t]he tragedy has the capacity to become the largest single marine insurance loss ever,” indicate the serious ramifications this disaster is likely to have on the insurance market. Below are key steps to help preserve and maximize insurance recoveries following the Francis Scott Key Bridge collapse:

Identify All Available Insurance Policies

Locating and carefully analyzing with coverage counsel all potentially applicable insurance policies is a critical first step in seeking recovery for a business’s losses. Key coverages that may respond to the bridge collapse and related disruptions include the following:

• Business interruption (BI or time element coverage) often covers a business’s losses resulting from the inability to put damaged property to its normal use or otherwise reimburses it for income that it would have earned but for the business interruption resulting from property damage.
• Supply chain or contingent business interruption (CBI) coverage typically covers losses associated with supply chain disruptions, including disruptions to a business’s direct or indirect suppliers, contract service providers, or customers. Standalone “supply chain” insurance policies may also be available.
• Marine hull and cargo coverage covers the risk of loss or damage to goods in transit over the ocean and may extend coverage to loss incurred when goods are delayed at port or associated warehouses. Other specialty coverages may also be implicated, including those issued by global insurers, international protection and indemnity (P&I) groups, and marine insurance pools.
• Inland marine insurance typically covers property, such as equipment, products, and materials, that is in transit or transported over land by, for example, trucks or trains.
• Liability insurance policies may help cover companies defending against claims related to their legal liability for the bridge collapse. These policies may include, for example, commercial general liability (CGL), directors and officers (D&O), and excess or umbrella policies.
• Reinsurance policies with cut-through clauses should also be evaluated. Insurance policies (of any type) can be, and often are, reinsured (the insurer, or “cedent,” insures the risk it has written). Those reinsurance policies may contain a “cut-through clause,” which will often state that in certain instances, the reinsurer will make a direct payment to the underlying policyholder and not to the insurer. These clauses require careful consideration and navigation.

Comply with Notice, Proof of Loss, and Suit-Limitation Clauses

Prompt notice to insurers is critical under insurance policies. Often, notice of a loss is required as soon as practicable. Some policies also require prompt notice of circumstance or of a claim. First-party insurance policies also typically require that a sworn proof of loss be submitted within 60 to 90 days, or sooner, absent written agreement by the insurer for an extension. Many policies also require any suit under the policy to be filed within one or two years after the inception of the loss.

Given the often-strict policy requirements, insurance recovery counsel should be involved immediately to assist with claims. These timing and other requirements may also be affected by state law.

Document Losses and Maintain Records

Businesses should also document, quantify, and track any damage or business interruption losses resulting from the bridge collapse as soon as possible. Key actions include, for example, tracking expenses needed to continue business operations and locating business accounting records relevant to financial performance and losses. This may involve collaboration among an impacted business’s operational, finance, risk management, and accounting personnel.

Engage an Experienced Insurance Recovery Team

While businesses are faced with the challenges of working around the clock to meet the needs of their employees, customers, consumers, and other stakeholders, they are also managing their own losses and damages. Given these concerns, it is important to think proactively and critically about assembling an experienced insurance recovery team that can engage with your business, brokers, insurance companies, and syndicates to maximize recoveries. In addition, where losses may implicate different types of policies, jurisdictions, and state laws, carefully navigating these areas with a multi-jurisdictional team is critical.

HOW WE CAN HELP

Our cross-border insurance recovery practice can assist businesses impacted by the Francis Scott Key Bridge collapse to preserve and enforce their rights and maximize insurance recoveries. Because the regional, national, and international scope of the disruptions implicates multiple potential laws and forums outside of the United States—including in Singapore, the UK, and Bermuda—our team can also represent companies in non-US insurance and reinsurance litigation or arbitration matters. Our lawyers around the world stand ready to assist clients facing these unique challenges.