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

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The massive cargo ship collision on Baltimore’s Francis Scott Key Bridge is likely to lead to billions of dollars in liability claims. Marine insurance companies will be on the hook for most of the costs.

With various owners and companies involved – and with some maritime laws predating even the sinking of the Titanic – sorting out the net, figuring out who owes what and addressing the damages from lost lives and damage to physical structures will be complex.

“This claim has the potential to be north of a billion dollars,” said John Miklus, president of the Marine Insurers Institute of America. “The litigation will take years.”

The Dali is owned by Grace Ocean Private, a Singapore-based company, and insured by Britain’s Defense and Indemnity Club.

Britannia is one of dozens of marine insurance member clubs under the International P&I Group of Clubs, a consortium that provides marine liability cover for 90% of ocean freight and claims liability obligations between members. (The International P&I Group of Clubs 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 reinsurers.

About 80 different reinsurers provide about $3 billion in coverage to Dali’s insurers, according to Moody’s analyst Brendan Holmes. Since the losses will be spread across so many insurers, it is unlikely to bankrupt any of the companies or cause a large increase in insurance prices, he said.

Miklus told CNN that these P&I insurance clubs pool losses together, but they also buy “an extensive reinsurance program.”

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

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

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

Damage and loss to cars and debris cleanup and rebuilding will also affect the total, Worters said.

Miklus cited the roughly $1.5 billion insurance payout after the Costa Concordia cruise ship ran aground on an island off Italy in 2012 as one of the highest insurance claims in recent memory. “I would expect this to rival that kind of claim in terms of total cost,” he said.

Bloomberg reported that insurers face up to $3 billion in claims, citing a note from Barclays analysts. Barclays declined to comment to CNN.

While the Dali is owned by Grace Ocean Private, it was chartered by Danish shipping giant Maersk when it docked early Tuesday morning.

When it comes to maritime law, “all responsibility ends up with the owner of the ship, which will be the Singapore company,” said Martin Davies, director of the Maritime Law Center at Tulane University. “Maersk, the Danish company that has all the cargo on board the ship, is not responsible,” Davies added.

But the shipowner has the potential to significantly limit how much he’s liable in this case, thanks to a statute dating back to 1851.

The statute — which was used by the owners of the RMS Titanic, among other cases — can limit the ship’s owner’s liability to the value of Dali after it went down.

Of course, the bridge will almost certainly be rebuilt, no matter how much insurance is paid. President Joe Biden said Tuesday that the federal government will pay for 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.

“My goal is to have the federal government pay the entire cost of rebuilding that bridge,” Biden said Tuesday. “And I expect Congress to support my efforts,” he said, adding that the process “will take some time.”

The president’s comments come especially in the midst of 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 may also require additional funding from Congress.

Scott Olson/Getty Images

Workers continue to investigate and search for victims after the freighter Dali collided with the Francis Scott Key Bridge causing it to collapse yesterday, March 27, 2024 in Baltimore, Maryland.

While the ship’s collision with the bridge is likely to disrupt businesses in the area, Davies notes that purely economic losses are not recoverable by shipowners in a maritime indemnity claim.

“All business interruption losses, which will be substantial, will not be recoverable by the ship,” Davies said, citing a 1927 Supreme Court decision, Robins Dry Dock and Repair Co . v. Flint, which he says set that precedent.

“For example, I believe there is a Domino sugar refinery near the bridge that uses it all the time and will suffer significant economic losses as a result that are not recoverable,” Davies said.

But claims from people who lost family members or were injured in the collapse are more likely to succeed.

“But apart from that, the economic impact of what has happened will be huge, but not recoverable from the ship,” Davies said.

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

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