In the wake of the Minneapolis bridge collapse last month, Loretta Worters of the Insurance Information Institute spoke with Claims to give readers an idea of the insurance claim implications involved in such a catastrophic loss.
What kind of insurance losses might the industry see from this catastrophe?
I-35 is a federal highway and owned by the federal government. That means it enjoys sovereign immunity and consequently would not have been insured for property or liability purposes. The fact that the bridge was undergoing repairs (probably by private local contractors) means that trial lawyers will attempt to assert that the work was the cause or a contributory factor in the collapse. There also will be suits against state agencies charged with bridge inspections. Other things that will be examined could include whether there had ever been a collision by a ship at the base of the bridge (this has happened before), negligent past repairs, etc.
Contractors typically will have multi-million dollar limits, but nothing close to what would be needed to pay the full value of the loss. Even if the suits are red herrings, they will still be called upon to pay defense costs. The principal impact will be on commercial liability and casualty excess insurers, along with their reinsurers.
In terms of immediate insurance implications, vehicles carrying collision or comprehensive coverage will respond to vehicle damage. Similar coverages will respond to commercial vehicles (and their contents), such as trucks.
What about business interruption?
It is unlikely that business interruption coverage will apply. No insured structures were damaged or destroyed by a covered peril. The fact that it will be more difficult to reach certain parts of the city or that customer traffic is down will not trigger business interruption.
Some firms may have contingent business interruption. For example, a food processor in St. Louis that relies on grain shipments barged down the Mississippi River. Those shipments could be interrupted and the loss of production may be insured.
Clean-up costs will be extremely expensive. Ultimately, there will be many millions in insurance dollars paid.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
