Posts Tagged ‘liability insurance’

Commuter Railroads Face Late March Insurance Deadline

March 13, 2021

Commuter railroads are facing a March 27 deadline to purchase new liability insurance coverage of at least $323 million.

The U.S. Department of Transportation said that is $28 million more than is currently required.

The insurance mandate is required by the Fixing America’s Surface Transportation Act of 2015.

During a March 10 hearing of the House Committee on Transportation and Infrastructure, Subcommittee on Railroads, Pipelines, and Hazardous Materials, Virginia Secretary of Transportation Sharon Valentine said some transit agencies are facing challenges getting an insurance policy before the deadline.

The Commuter Rail Coalition said commuter railroads recently have experienced dramatic premium increases, despite having no losses, and now face the prospect of fewer insurers in the market willing to write policies, thus threatening their ability to operate.

CRC said insurers that provided coverage in the past “have endured losses due to wildfires and hurricanes for other industries and have made a strategic decision to withdraw in part or in whole from the excess liability market; many are no longer writing policy coverages.”

Railroads “have struggled for the past several years to obtain sufficient coverages that are oftentimes provided through multiple layers of coverage provided by numerous insurers. As fewer insurers offered policy coverage, premiums were driven up, sometimes by more than 100 percent in annual increases.”

Valentine said a coalition of commuter railroads is working with the federal government to extend the deadline or obtain congressional authorization to allow commuter railroads to secure additional liability coverage in time to meet that deadline.

CRC has asked U.S. Transportation Secretary Pete Buttigieg to extend the March 27 deadline by a minimum of 120 days.

During another congressional hearing last November, Paul P. Skoutelas, president of the American Public Transportation Association, said his group is researching how liability costs have increased for the commuter rail industry and seeking to determine the reasons for the increases.

Skoutlelas said during that hearing that federal law provides a backstop to cover losses above liability limits where the insurance marketplace has become noncompetitive and premiums unaffordable.

APTA is developing a legislative proposal to reduce liability insurance premium costs for commuter railroads.