Liability claims resulting from the bridge collapse in Minnesota will be limited, since the state and federal government have immunity from civil actions, but insurers are not off the hook, according to industry experts.
New York-based Insurance Information Institute said the I-35 bridge that collapsed Wednesday evening is a federal highway owned by the federal government and therefore enjoys sovereign immunity. Because of that immunity, there would be no property or liability insurance.
David D. Thamann, managing editor of FC&S, an affiliate of National Underwriter Companies, agreed that because of government immunity protections, insurance would not come into play related to liability from the collapse of the bridge itself.
Both I.I.I. and Mr. Thamann pointed out, however, that does not mean insurers can breathe a sigh of relief.
According to reports, there was construction work going on at the time the bridge collapsed. Mr. Thamann said this could bring the contractors' general liability into play. I.I.I. said trial lawyers would attempt to assert that the work was the cause or contributed to the collapse. The association also said there would be suits against state agencies responsible for inspections.
I.I.I noted that contractors typically carry multimillion-dollar limits, but nothing close to what would be needed to "pay the full value of the loss." While some of these suits may be questionable, insurers will still be on the hook for defense costs. The impact will principally fall on commercial liability and casualty excess insurers, as well with reinsurers.
Also impacted will be personal and commercial lines automobile and truck policies.
On the issue of business interruption coverage, I.I.I. said it would probably not apply.
Susan Massman, assistant editor at FC&S, said that if a business shut-down was directly related to the collapse, or if civil authorities closed businesses or access to the businesses, then the business interruption policy would kick in. A slow-down 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.
I.I.I. noted that some firms may have contingent coverage for business interruption. An example where this could apply would be if a grain shipment could not 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," I.I.I. said.
The bridge was one of thousands across the country deemed "structurally deficient," which means it will need to be replaced but was considered safe at the time.
The failure of the eight-lane bridge has claimed four lives. Authorities believe that number could be higher; as many as 30 people remain missing.
No cause for the bridge failure has yet been determined, and reports said it would be months before officials came to any conclusions.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.