Who is responsible for paying for the Baltimore Bridge collapse?
Who is responsible for paying for the Baltimore Bridge collapse?

Dally crashed into the Francis Scott Key Bridge in Baltimore on Tuesday.
Jim Watson/AFP/Getty Images

  • The Francis Scott Key Bridge in Baltimore collapsed after a container ship collided with it.
  • Several businesses will likely be on the hook to foot the bill after the disaster.
  • The marine insurance industry will be burdened with the highest costs.

Baltimore’s Francis Scott Key Bridge collapsed Tuesday after a large container ship crashed into it, leading to six suspected deaths and possible millions of dollars in damage.

It is still too early to assess the total economic impact of the disaster, but between the cost of rebuilding the decades-old bridge, compensation for victims’ families and paying out damages for supply chain disruptions, the final cost of the disaster is expected to be significant.

Who will pay to rebuild the bridge?

President Joe Biden said Tuesday that the federal government should be responsible for paying to rebuild the damaged Francis Scott Key Bridge.

“It is my intention that the federal government pay the full cost of rebuilding this bridge, and I expect Congress to support my efforts,” Biden said.

The bridge was built in the 1970s for about $60 million, but the cost of restoring it could be 10 times its original cost, an engineering expert told Sky News.

Francis Scott Key Bridge, named after Francis Scott Key, author of The Star Spangled Banner.
William Sherman via Getty Images

Baltimore is among the nation’s busiest ports, seeing more than one million shipping containers pass through each year. The collapse, which closed the port to all sea and most road traffic until further notice, is already wreaking havoc on the supply chain.

The cost of building the bridge quickly enough to compensate for the deviations as much as possible could leave the government with a bill of more than $600 million, David McKenzie, chairman of engineering and architecture consultancy COWIfonden, told Sky News.

Who will pay for the damage to the ship and its cargo?

The Dali container ship is owned by a Singapore-based firm. The vessel’s charterer, Maersk, confirmed to Business Insider that shipping company Synergy Group is operating the vessel.

However, the cargo companies on board the Dali will ultimately be responsible for the damage to the vessel and the cost of the cargo.

Dali was carrying 330 containers, which must now be diverted, according to Ryan PetersenCEO of supply chain logistics company Flexport, which had two containers on the ship.

An ancient maritime law known as “general average” dictates that companies with even one container on board a ship must split the damage proportionately based on the number of containers, ensuring that all stakeholders who benefit from the voyage are share the risk, Petersen said.

Drone footage shows the aftermath of the collision of the container ship Dali with the Francis Scott Key Bridge in Baltimore, Maryland on March 26, 2024.
Anadolu Agency via Reuters

The principle dates back hundreds of years and was originally intended to ensure that sailors aboard a ship wouldn’t have to worry about a particular cargo if a disaster forced them to start throwing containers overboard, according to Petersen.

Who will pay for everything else?

The majority of the financial fallout is likely to fall primarily on the insurance industry, according to media reports.

Industry experts told the FT that insurers could pay out losses for bridge damage, port disruption and any loss of life.

The collapse could result in “one of the largest claims ever to hit the marine (re)insurance market,” John Miklus, president of the Marine Underwriters Institute of America, told Insurance Business.

He said at the exit that the loss of toll revenue while the bridge is rebuilt would be costly, as would any liability claims for deaths or injuries.

Dali is covered by Britannia Steam Ship Insurance Association Ltd., known as Britannia P&I Club, according to S&P Global Market Intelligence.

Britannia did not immediately respond to a request for comment from Business Insider, but told the FT that it was “working closely with the ship’s manager and the relevant authorities to establish the facts and help ensure that this situation is resolved quickly and Professionally”.

Britannia is one of 12 mutual insurers included in the International Group of P&I Clubs, which maintains more than $3 billion of reinsurance coverage, sources familiar with the matter told Insurance Business.

Britannia itself was responsible for the first $10 million in damages, both the FT and Insurance Business reported. All that remains is dealt with by the wider mutual insurance group and Lloyd’s of London, the UK’s reinsurance market, according to the FT.

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