While it is too early and not appropriate to comment on who is at fault at this time, as the authorities focus on a rescue operation, due to the marine insurance required by a ship of this type and size to trade internationally, the ship will be insured for its liabilities by one of the international group of P&I Clubs, insurers who cover ship owners, operators, and charterers for liabilities with limits in the billions, through a complex and multi-layered insurance solution spread across London, Bermuda and the world.

These potential liabilities go beyond the rebuilding of the bridge and will need to consider removing the bridge debris currently sitting on the ship and at the bottom of the Patapsco River. The economic disruption and pain felt by businesses and individuals in Maryland and the Baltimore economic area will be widespread and likely take years to fully comprehend and compensate those affected.

As for the ports, terminals, their suppliers and stakeholders west of the Francis Scott Key Bridge, hope lies in two directions as they consider how to act, what support they may have to their path back to normal and the economic support insurance may offer. With the eyes of the world in focus the economic drivers of the region will push to use every avenue to clear the channel and allow free access of ships to the ports and terminals in the Baltimore maritime area.

Secondly, ports and terminal operators often, but not always, insure their potential loss of revenue through business interruption insurance. This type of insurance is by no means mandatory and the decision to purchase it tends to be driven by the risk appetite of the port or the stakeholders, such as the banks or lenders, who demand the ports protect their income in the event of a catastrophe such as this.

Standard business interruption insurance for a port protects against the loss of revenue following an accident that damages an insured’s owned or leased property, with the deductible element based in time rather than a set monetary value (usually seven or 14 days but potentially higher in a natural catastrophe incident.) Establishing the quantum of a claim can be a significant challenge in a business interruption event as rather than paying a fixed amount per day or the total revenue declared on a pro rata basis for the time affected, any claim is subject to forensic scrutiny so operators, suppliers, and other third-party involvement will need to keep accurate records of their financial losses to establish the Business Interruption and work closely with their brokers and insurers.

Unless the bridge was owned by the Port Authority or terminal operator, this cover would likely not be triggered. The second and less common Business Interruption insurance protects against port blockage or the denial of access to the port, effectively ships being unable to gain access to the quay whether the blockage is directly at, adjacent to or from an obstacle 500 miles away. While we do not know the expected duration of blockage, and this is likely a millions of USD per hour question, this may be the largest example of port blockage seen by the insurance market in recent years.

Many will remember the Ever Given container ship that blocked the Suez Canal in 2021. While world headline news, the actual blockage lasted a little over six days but the blockage to world trade and lost revenue per day put the global shipping industry and salvage experts on standby. Unsurprisingly the ports of the Red Sea and Mediterranean were on high alert and in fear of the effect on trade if the Canal was blocked in the long term. The same worries are likely being contemplated by the port operators in Baltimore.

Secondary factors and levels of Business Interruption cover can include insurance to protect the increased cost of working for operators where operators can spend a USD to save a USD of revenue or Additional Increased Cost of Working where operators can spend more than the lost revenue if it enables operators to maintain business operations to prevent long term harm to the port operations and revenue.

The Port of Maryland Authority and the port operators and terminals of Baltimore will be counting the hours and enacting emergency response and disaster recovery plans that are likely to be in place. Insurers and other experts will be at the ready as recovery begins and we start to understand the wider ramifications.

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