More like a troubled bridge over water, amirite?
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Troubled bridge underwater.
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Maybe Iâll move news of the Baltimore crash/ bridge collapse to itâs own thread later. In the meantime, ocean carriers are invoking force majeure
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Wondering if all those industries affected by the delay will do the right thing: raise prices on all goods right now.
As the gasoline companies do.
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I donât understand the use of this in the context of insurance:
Force majeure events are usually defined as certain acts, events or circumstances beyond the control of the parties, for example, natural disasters or the outbreak of hostilities. A force majeure clause typically excuses one or both parties from performance of the contract in some way following the occurrence of such events. Its underlying principle is that on the occurrence of certain events which are outside a partyâs control, that party is excused from, or entitled to suspend performance of all or part of its obligations. That party will not be liable for its failure to perform the obligations, in accordance with the clause.
Does that mean next time we have a hurricane we can declare force majeure, we couldnât control the hurricane so sorry about your house?
It seems weird to have âweâll cover your little losses, but if a big loss happens, oopsie daisy no coverageâ
As I read it, itâs related to the additional expense that the receiver is going to incur to get their good from a different port than originally agreed.
I think from an insurance perspective, IIRC, normally the shipper is on the hook for damages to goods until it is picked up by the receiver. With force majeure, that coverage now ends once the cargo is unloaded at port.
Sounds like this is what insurance is for. I can understand between two parties, like in this instance the shipper and the receiver, and in this instance there will be a delay in shipping to and receiving in Baltimore for several weeks or months, different from what the contract states.
I donât think that would be permitted when the insuring agreement is to provide coverage to your house.
However, if the insurance contract were providing coverage for my liability for losing or damaging your cargo as it travels in a container on my ship, a strong case should be made that I shouldnât be liable if your cargo is destroyed due to a tornado trying to eat the container or my ship.
I guess it depends whether the insurance is covering âliability for me causing damage to your propertyâ versus âliability for your property being damaged while under my care.â
And I donât know how these contracts are written. If the intent is just to cover âmistakes by the shipper causing damage to propertyâ rather than âdamage to the propertyâ in general then I see.
We need a maritime lawyer on this forum. Anybody know where Chareth went?
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Youâre a crook, Captain Hook. Judge, wonât you throw the book, at the pirate?!
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I donât think that force majeure affects if the coverage exists, I think it affects when the coverage exists.
Like say Iâm shipping a Mercedes Benz from the Mercedes factory in Stuttgart, Germany to a local dealer in, say, Alexandria, VA. And youâre insuring the Mercedes all the way from Stuttgart (where it had been the manufacturerâs responsibility) to Alexandria where it becomes the dealerâs responsibility. At any point in between, Rastiln Insurance Company is responsible. And Iâm paying you a premium of $X to cover the Mercedes, which you have accepted. And the car is to be transported by rail from Stuttgart to [European port] and then by container ship to the Port of Baltimore, then by truck to the dealer in Alexandria.
But now that the Port of Baltimore is closed, itâs going through Port Newark instead. Well Newark is a lot further from Alexandria than Baltimore is. A lot more chance of something happening en route from Newark to Alexandria than from Baltimore to Alexandria. You didnât sign up for that added responsibility.
So you declare force majeure and once the Mercedes is offloaded in Newark your responsibility ends.
If there is a hurricane that throws the Mercedes into the ocean while the container ship is still at sea, thatâs still your responsibility. If the Mercedes was damaged in Europe, thatâs still your responsibility. But if itâs damaged at Port Newark or in transit from Newark to Alexandria then itâs not.
At least, thatâs how I understand it.
Thats what reinsurance is for.
Standard liability contracts are not designed to cover every eventuality.
So the likely âlosersâ here are the reinsurers. They are going to take billion dollar hits over the next few years.
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LegalEagleâs review of the legal/liability issues:
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Chubb is reportedly cutting a $350m check to the State of Maryland, paying limits on the policy covering the bridge. Supposedly free link that sadly doesnât generate a preview:
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For posterity: [at least some excerpts]
insurance and lawsuits within
Insurer to Make $350 Million Payout in Baltimore Bridge Collapse
Chubb to issue first large check in expected yearslong fight over $1 billion-plus in damages
By
May 2, 2024 5:30 am ET
Chubb CB -0.05%decrease; red down pointing triangle, the insurer of the collapsed Francis Scott Key Bridge in Baltimore, is preparing to make a $350 million payout to Maryland, paying the full amount of the coverage quickly rather than waiting for the rebuilding to begin.
The check, which is the upper limit of the stateâs coverage for the structure, would be the first large payout in what will likely be a yearslong wrangle over who bears the $1 billion-plus estimated cost of the bridgeâs collapse. The collision, when a giant cargo ship plowed into and destroyed the bridge in the early hours of March 26, killed six people and effectively shut down Baltimoreâs busy port.
Chubb, along with the state and the families of the victims of the crash, will likely sue the shipowner and others to recoup losses from the crash.
The insurer is expected to authorize the $350 million payment within weeks, according to Henry Daar, head of property claims North America for WTW, the bridgeâs broker.
âI am confident that Chubb will pay the full limits of liability,â Daar said.
Claims under the stateâs policy are bound to exceed the $350 million limit, he said.
Damage to the bridge alone could reach $1.2 billion, analysts at investment bank Barclays Capital estimated last month. The policy also provides some business-interruption coverage for the port, which is losing around $88 million a year in tolls, according to Daar.
Insurers can respond to claims that will blow through a policyâs limits either by writing a check for the full amount upfront, or by paying in dribs and drabs, as the work is done. That pay-as-you-go approach can rack up payments to loss adjusters and other professionals.
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Grace Ocean, the Daliâs Singaporean owner, and Synergy Marine, its manager, last month filed in Baltimore federal court seeking to limit their liability. The companies invoked a centuries-old law that caps exposure to the value of the ship and its freight pending, or the amount paid to carry the goods. In the case of the Dali, that would put a ceiling on payouts of around $44 million, the legal filing said.
If the court approved the move to limit liability, the estimated total insured loss would fall significantly from the current range of $2 billion to $3 billion, âprobably to less than $1 billion,â according to Marcos Alvarez, global head of insurance at ratings firm Morningstar DBRS.