Liability claims resulting from the I-35 bridge collapse in Minnesota may be limited for some state and federal government authorities because of immunity from civil actions, but that won't deter what could amount to millions in claims against insurers, coverage experts say.

The I-35 bridge, which collapsed into the Mississippi River on Aug. 1, is a federal highway owned by the federal government, and thus enjoys sovereign immunity, meaning there would be no property or liability insurance considerations for Washington, according to the New York-based Insurance Information Institute.

David D. Thamann, managing editor of FC&S--an affiliate of National Underwriter--agreed that because of government immunity protections, insurance would not come into play related to liability from the collapse of the bridge itself.

However, both the Institute and Mr. Thamann pointed out this does not mean insurers are totally off the hook.

Reports say the bridge was undergoing resurfacing at the time it collapsed. Mr. Thamann said that could bring contractors' general liability into play.

The Institute said plaintiff lawyers would attempt to assert that the work was the cause of, or at least contributed to the collapse, leaving contractors open to potential suits. The Institute also said there could be suits against state agencies that were in charge of inspecting the bridge.

The Institute said contractors typically carry multimillion-dollar limits, but nothing close to what would be needed to "pay the full value of the loss." Even if the basis for suits is questionable and no coverage is found to apply, insurers will still be on the hook for defense costs, the group noted.

The impact will therefore principally be on commercial liability and casualty excess insurers, along with their reinsurers. Also affected will be personal and commercial auto and truck policies for vehicles damaged or lost in the collapse.

Federal investigators last week reportedly found a potential design flaw in the steel parts that connect girders, impacting how much weight the bridge can hold, raising additional liability issues.

Susan Massman, assistant editor at FC&S, said that if a business shutdown was directly related to the collapse, or if civil authorities closed businesses or access to them, then business interruption policies would kick in. A slowdown in business, resulting in economic loss, is also covered, but there must be a direct correlation between the collapse and the subsequent interruption in business, she pointed out.

The Institute noted that some firms may have contingent coverage for business interruption. An example where this would come into play would be if a grain shipment cannot be transported to another location because the collapse caused ship traffic to be halted along the Mississippi.

"Ultimately, there will be many millions in insurance dollars paid," the Institute said.

John Mullen, a civil trial defense attorney for Cozen O'Connor in Philadelphia, said the potential for litigation can reach far and wide, and he does not believe sovereign immunity will mean complete protection for government bodies from lawsuits.

The bridge was one of thousands across the country deemed "structurally deficient," which means it was considered safe at the time but needed replacement or extensive repair. No cause for the bridge failure has been determined, and reports say it will be months before government officials understand why this happened.

"Anybody from the designers to the construction crews, to anyone who has done a study or whatever on that bridge can get sued by plaintiffs lawyers," said Mr. Mullen, noting that includes some government agencies, both state and federal, where protections may not apply.

He said there are some statutes that will provide protection for some contractors and designers due to the length of time the bridge has been in existence, but when dealing with a catastrophic loss such as this, "everyone is in the game, and it is unrealistic to imply otherwise."

Plaintiffs attorneys will aim to sue as many entities as they can, targeting the individuals with the deepest pockets, he said.

Those suing will probably be the individuals who suffered injuries and the families of those killed in the collapse. However, he suggested, months or even years from now there could be those who come forward and sue, saying they suffered traumatic injuries from either being involved in, or witnessing the incident and subsequent deaths, contending the trauma left them unable to work or function.

Insurers, he said--besides facing claims for physical damage, deaths and injuries--will also have to cover defense costs for policyholders who are sued. For many carriers, the decision to settle may be cheaper than going to trial, he suggested.

"No one should rule out anyone as a defendant," he said.

Another aspect of the bridge collapse could be environmental risk exposures.

Rodney Taylor, managing director of Aon Environmental services group, a unit of the Chicago-based insurance brokerage firm, said while there could be some concern about lead paint due to the bridge's age, or about seepage of oil, gas or other pollutants from the cars and trucks trapped in the debris, the currents of the Mississippi would probably wash away any accumulation, making this a minor issue.

However, new construction will involve an environmental impact study and the purchase of appropriate contractors' liability policies by the construction companies, something he said is standard today.

The failure of the eight-lane bridge claimed five lives. Shortly after the incident, authorities feared as many as 30 people were trapped in their cars and trucks under the debris. Fortunately, many were accounted for within days, but eight remain missing and are feared dead. Over 100 people were injured and the Associated Press said four remain hospitalized.

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Despite Gov't Immunity, Insurers May Face Claims Related To Bridge Collapse

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