THE US government has pledged to meet the full cost of rebuilding the road bridge in Baltimore destroyed after being hit by Maersk-operated boxship Dali (IMO: 9697428) in the early hours of Tuesday morning.

But while Joe Biden made a commitment to “move heaven and earth to reopen the port and rebuild the bridge as soon as humanly possible”, he notably did not preclude seeking a refund from insurance companies.

The primary insurance carrier for the Francis Scott Key Bridge — named for the man who wrote the lyrics for the Star-Spangled Banner more than 200 years — has been revealed as Chubb, one of the giants in the property insurance niche.

If Chubb does have to pay out, it can reasonably be expected to seek “subrogation” — pursuing a third party that caused an insurance loss to recover the cost of the claim.

In practice, the bulk of what is starting to look like an outsize bill will end up in the protection & indemnity sector, with the first $100m split among the 12 members of the International Group and the excess passed on to the reinsurance market.

Much will depend on who is deemed legally liable for the casualty and the size of compensation demanded. Given the infamously litigious nature of insurance claims in the US, there is a real prospect of a decade or more of legal wrangling, as seen after the Deepwater Horizon rig explosion in 2010.

According to Allianz Commercial, there have been 203 cases of containerships around the world striking infrastructure over the past decade. The most common incidents involve hitting harbour walls, piers, quays and locks. Running into bridges seems to be rare, although there are no exact data.

As Lloyd’s List reported yesterday, the principal elements in the claim are likely to be made up of the replacement value of the bridge itself and personal injury and loss of life compensation to the victims or their surviving families.

It is now clear that there will be a sizeable cargo claim, with some cargo loss and damage reported, according to the WK Webster website. The size of any payout will be pro rata.

It is also now known that significant sections of the Dali’s bridge collapsed as a result of the allision, and a fire ignited on board the vessel. More positively, the hull is intact, although pictures suggest the ship is listing slightly.

At this stage, both constructive total loss and actual total loss declarations appear unlikely. Any necessary repair work be covered by its hull & machinery policy in the normal way.

Serious delays

On the other hand, the damage is serious enough to ensure that the vessel will not be going anywhere else any time soon, resulting in serious delays to all cargo on board and consequent payouts under delay cover, Webster added.

Webster — and presumably rival firms — have already engaged local surveyors to commence investigations and undertake any loss adjustments or other work in connection to the casualty. Estimates on the value of cargo claims will be available once their work is done.

Some logistics industry leaders have argued on social media that general average could be declared. That would entail the division of costs between hundreds of cargo interests. But shipping lawyers responded that this preconditions are unlikely to have been met.

Liability has yet to be legally determined. The casualty will now be the subject of a casualty investigation, formally the responsibility of flag state Singapore.

But Jennifer Homendy, chair of the National Transportation Safety Board — the US equivalent of Britain’s Marine Accident Investigation Branch — has now confirmed that it too will be looking into the crash, in collaboration with the Singaporeans.

The NTSB investigation, which is likely to include public hearings, is scheduled to take a year.

Among the aspects it is likely to consider is the outcome of a port state control inspection in San Antonio, Chile, which recorded a deficiency in respect of propulsion and auxiliary machinery.

This is seen as potentially significant, given that the Dali’s crew reported loss of control and power outage in the minutes before the allision occurred.

If liability is found to rest with the owners, the tab will be footed by the Dali’s protection & indemnity policy. UK-based marine mutual Britannia has confirmed that Dali is entered on its mutual book.

But Britannia itself will only be on the hook for a small slice of claim, namely the first $10m. The layer from $10m to $100m will be shared with the other 11 affiliates of the International Group of P&I Clubs under the pool scheme, with a reinsurance mechanism kicking in after $100m.

The biggest item in any liability payout will be the replacement cost of the Francis Scott Key Bridge. The structure cost $60m to build in the 1970s, which equates to around $300m in 2024 dollars.

Civil engineering experts quoted in the domestic media highlighted the need to rebuild in a hurry, given its vital importance for local commuters. That will put the likely replacement cost at more like $600m.

Reconstruction “will not be quick, and will not be inexpensive”, admitted US Secretary of Transportation Pete Buttigieg.

The second key element in any payout will be compensation to the families of those killed in the incident. At the time of writing, six people were missing, presumed dead.

Payments for “wrongful death”, as it is known in the US, typically run in the range of $500,000-$1m but can go substantially higher. Payouts of several million dollars a head are in prospect.

P&I clubs faced with liability for deaths of US citizens are apt to make a prompt offer, viewing the certainty of a quick settlement as preferable to the uncertainty and expense attached to protracted litigation in that country.

Some people have also been injured, and may have valid personal injury claims on P&I. These will vary in line with the severity of the injury. But the death and injury claims seem set to run to tens of millions of dollars.

Delays to other vessels are not a P&I liability, although prudent shipowners will have delay cover. P&I clubs often offer delay cover as a sideline and will find themselves on the hook for much of it.