Insurance considerations in the MV DALI and Francis Scott Key Bridge Incident
Whether you like it or not, you are going to be hearing about the MV DALI and Francis Scott Key Bridge accident for many years to come, not least as it may well turn out to be the biggest insurance claim on record. This is a fast moving and developing situation, which will inevitably have changed since this article was written. Contributors from insurance experts, Lockton, take up the story and review the complexity of the situation.
In the wake of the early morning collision on 26 March 2024, between the DALI container ship and the Francis Scott Key Bridge, resulting in the bridge’s collapse, the complexity of insurance coverage in maritime incidents has been brought to the forefront.
The incident resulted in extensive property damage, loss of life, and a significant disruption of shipping and vehicular traffic in and around the Port of Baltimore. With many losses yet to be quantified, a crucial question emerges: which losses are recoverable and from whom?
Below is a summary of the marine insurance coverages potentially triggered by this tragic event, along with the implications of relevant U.S. maritime law principles for claimants, insurers, and reinsurers.
Hull & Machinery (H&M) (Purchased by the owner of DALI;
claim paid to same)
Physical Damage: Covers structural damage to the ship’s hull, with current repair estimates in the region of $28 million.
Salvage Costs: Covers expenses incurred in salvaging the vessel, currently estimated to be in the region of $19 million.
General Average: May cover the ship’s proportion of general average, depending on the insurance policy terms.
Loss of Hire (LOH) (Purchased by the owner of DALI;
claim paid to same)
Compensates for loss of income due to the vessel being out of service.
Reimbursement of pre-agreed daily lost revenue until the vessel returns to normal service, subject to a time element deductible.
Freight.
Demurrage and defence (Purchased by the owner of any
vessel impacted by the port/bridge closure; claim paid to same)
Covers legal expenses incurred in defending or pursuing legal action relating to the port or bridge closure. Cover typically discretionary in nature.
98 | ISSUE 109 | SEP 2024 | THE REPORT
POW CRASH
BOOM
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