The Francis Scott Key Bridge Disaster: Legal Implications and Reinsurance Considerations

The recent collision of the Singapore-registered container ship MV Dali with the Francis Scott Key Bridge in Baltimore has sparked a complex legal battle involving billions of dollars in potential losses. The estimated insured loss from the accident is between $3B and $4B, with much of the claim falling on 80 global reinsurers of the International Group of P&I Clubs.

In response to the incident, the owners of the MV Dali have filed a petition in the U.S. District Court for the District of Maryland seeking to limit their liability to $42.5 million under the federal Limitation of Liability Act. This act, enacted in 1851, aims to protect vessel owners from financial ruin in the event of a maritime accident.

However, determining the cause of the collision will be crucial in determining whether the owners can successfully limit their liability. If the collision was caused “without the privity or knowledge of the owner,” they may be able to limit their liability to the value of the vessel.

One significant challenge in this case is the prohibition of recovering pure economic loss under maritime law, unless there is physical damage. This means that claims for business interruption related to the destruction of the bridge may not be recoverable against the owners of the MV Dali.

Reinsurance will play a significant role in covering the potential losses from the incident, with the Dali’s primary insurer responsible for the first $10 million of loss. The International Group’s reinsurance program, led by AXA-XL, covers up to $3 billion in losses per event.

Legal experts from Clark Hill’s Insurance & Reinsurance Practice are available to assist carriers and reinsurers in navigating the complex legal issues arising from the Francis Scott Key Bridge catastrophe. With expertise in mediation, litigation, and arbitration, the team can help insurers and reinsurers protect their rights and assess their liability in this high-stakes legal battle.

As the legal proceedings unfold in Maryland federal court, the implications of this case on federal maritime and reinsurance law will be closely watched by industry experts and legal professionals alike.