TAKEAWAYS

• Commercial property policies typically include a wide range of coverage extensions, including “contingent” coverages that apply even when the policyholder’s own property is not physically damaged.
• Even if you have not yet identified all your losses, consider providing notice as soon as possible to any insurance company under whose policy you may seek coverage.
• Keep detailed records, and document when and how your business was interrupted.

In the early morning of March 26, 2024, a cargo ship estimated to weigh more than 100,000 tons catastrophically struck the 1.6-mile-long Francis Scott Key Bridge while departing the Port of Baltimore. This led to fatalities and interruptions to the major maritime artery into and out of the port city. Not only did 31,000 vehicles cross this bridge each day, the now blocked Baltimore port handled 52.3 million tons of foreign cargo worth nearly $81 billion in 2023 and is responsible for more than 15,000 jobs.

According to an update from the Environmental Protection Agency, the day after the collapse, while the port was still processing trucks in its terminals, it had suspended inbound and outbound vessel traffic. Although clearing the bridge debris is already underway, the port is officially “out of commission indefinitely,” causing major impacts on global trade and supply chains.

Impacted businesses should consider whether they have insurance coverage that will help them manage their losses. Policyholders will have many questions, such as:

• Can we recover profits lost even if our physical property was not damaged by the incident?
• What about losses from interruption of our customers’ or suppliers’ businesses?

Immediate action, careful consideration and, ultimately, presentation of insurance claims will be crucial for maximizing recovery.

Assess All Potential Coverages
Commercial property policies typically include a wide range of coverage extensions, including “contingent” coverages that apply even when the policyholder’s own property is not physically damaged. Contingent coverages apply when the policyholder sustains losses as a result of damage to third-party property (such as the property of critical suppliers of goods and services or, as here, dependent property like the Port of Baltimore). These extensions also include coverages for Civil Authority and Ingress/Egress losses, both of which may be at issue following the bridge collapse and subsequent governmental orders that resulted from it. For instance, depending on the policy, the Maryland governor’s declaration of a State of Emergency, or the closure of the Baltimore Port, may be relevant to your recovery strategy.

Sometimes, businesses contract with other businesses to ship their goods or in connection with their overall business. In some cases, these contracts may provide for what’s known as “additional insured” rights. These additional insured rights can provide valuable sources of insurance recovery in some situations, so carefully consider any such rights you might have and be certain to obtain and review the full policies so that you know your rights and any coverage they may provide. A Certificate of Insurance is not sufficient.

Place Insurers on Notice
Even if you have not yet identified all your losses, consider providing notice as soon as possible to any insurance company under whose policy you may seek coverage. (This includes any policy under which you might have contractual rights as an additional insured.) Notice is just that—notice to your insurer that you may have a claim. Do not assume you do not have coverage, and do not assume that your insurance broker has provided notice to the carriers. Be sure to precisely follow the requirements for notice in your insurance policies, as different policies may have different requirements, such as the notice deadline, the person or organization you must notify, the information required, and the form of notice. Also watch out for obligations and conditions in the event of a loss, such as providing a timely Proof of Loss and time limitations on bringing suit in the event the insurer wrongly denies or limits coverage.

Document and Mitigate Your Losses
For any property damage, be sure to carefully document your losses. For many policyholders, the biggest challenge in securing coverage for business interruption or contingent business interruption can be valuing and documenting the loss. Keep detailed records, and document when and how your business was interrupted. Attempt to mitigate losses by using other suppliers or trade routes where possible. Mitigation efforts may be obligatory under the insurance policy, and extra expenses incurred to mitigate losses may be covered by the policy.

It is frequently necessary to get a qualified forensic accounting firm involved alongside coverage counsel to ensure the loss is properly measured and documented. These professional fees are frequently covered under policies, subject to sub-limits. Usually, public adjuster and attorneys’ fees are not covered. Some policies will cover your internal costs for preparing the loss, so read the policy carefully and track your own time (which, as claims drag on, can become very significant). Having coverage counsel involved early in the process and working alongside your broker helps to not only ensure you are getting the right legal advice but can also help to protect sensitive communications under the attorney-client privilege.

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