SHORT LINE RAILROADS LOSE $1,000,000’s DUE TO THE
ACTIVITIES OF THEIR VENDORS, CONTRACTORS, AND INVITEES
The most calamitous cause of liability (casualty) losses suffered by the railroad industry has been the result of collisions and derailments which resulted in bodily injuries, and/or the release of hazardous materials. Fortunately, these causes of loss are being addressed by positive train control, better route management, and improved tank car design. The second largest cause of liability (casualty) losses suffered by the railroad industry has been the result of employee injuries, and the activities of vendors, contractors, and invitees. Unfortunately, these causes of loss are not being effectively addressed by the short line railroad industry.
The fault is not due to the railroad’s contract indemnity provisions. The fault is due to the railroad’s contract insurance provisions. The insurance provisions specified, which are intended to secure reimbursement from commercial insurers for losses which are the result of vendors, contractors, and invitees activity, fail to do so for the following reasons: 1. They specify outdated forms of insurance coverage that are no longer obtainable in today’s insurance marketplace 2. They specify insurance provisions using antiquated terminology which no longer has meaning in today’s insurance marketplace. One principle of law is that a party’s performance under a contract can be excused if performance is impossible. If one party’s actions (or inactions) prevent the other party from being able to perform, courts usually hold that performance is impossible and excuse the required performance.
The result is familiar to us all. A horrific accident occurred that required that everyone pull out their insurance policies only to learn that they do not provide the coverage that was thought to be in place. The consequences: First, coverage disputes, and lawsuits with the insurers and between the contracting parties. Second, a post contract negotiation process begins as the parties are forced to compromise with each other and the insurer on the scope of insurance to be provided. In every case this is very time consuming and very expensive.
What can your railroad do to protect itself from the second largest cause of liability (casualty) loss? Employ CRTC10TN. CRTC10TN is the registered trade name of the contractual risk transfer methodology copyrighted by CRT Consulting, LLC. CRTC10TN was developed for and validated at railroads for the purpose of helping to assure that commercial insurance would be available to fund the indemnity provisions of a railroad’s contacts with vendors, contractors, and invitees. It has helped a number of railroads recover millions of dollars from commercial insurers that otherwise they would not have received.
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