The railroad industry is one of the oldest forms of transport in the country, and has formed the backbone of US freight transportation since the early 1800s.
Though growth in railroads has largely stalled, there is still plenty of work repairing and maintaining tracks – and, of course, railroads are still being used to move large quantities of goods cross-country.
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According to the Association of American Railroads (AAR), last week alone there were more than 530,000 carloads and shipping containers moved. Since the beginning of the year, there have been more than 22 million carloads and shipping containers freighted across America.
And where there is heavy machinery, big business, and the potential for human and mechanical error, there is also insurance.
Roy Scott, vice president and railroad underwriter at Arch Insurance Group, told Insurance Business about the railroad program he writes.
“Although railroading is not a high growth industry, there is substantial maintenance of both equipment and track that takes place continually,” Scott said.
“Rail ties are constantly being replaced, weather events cause damage to tracks, equipment is used 24/7 and must be maintained and replaced on a regular basis. Even railroad crossings (with roadways) must be inspected and repaired often.”
In addition, he said, a new federal ruling that railroads need to all have Positive Train Control (PTC) in place by December 31, 2018, “has created even more jobs and more spending on infrastructure during the past few years.”
According to the AAR, the PCT “is a set of highly advanced technologies designed to make freight rail transportation … even safer by automatically stopping a train before certain types of accidents occur.” The system is designed to prevent train-on-train collisions, derailments caused by excessive speed, and stop a train going through a track switch left in the wrong position, among other things.
The Arch program targets two sets of buyers, Scott said: railroads and railroad contractors.
“We write policies nationwide through both retailers and wholesale brokers,” he said.
The target for railroad liability coverage is the short line and regional railroad owner, and covers third party liability, Federal Employers' Liability Act (FELA) claims, damage to railcars and contents, and pollution clean-up costs.
The general liability coverage is for the railroad construction industry, including track builders, locomotive repairs, railcar repair and cleaning, and manufacturers of railroad equipment and products.
Arch also provides policies for scenic, tourist and excursion railroads, Scott said, as well as “contingent railroad leasing liability policies for the lessee of railcars to the railroad industry and to shippers using railcars.”
In terms of claims, he said most stem from accidents and injuries.
“Claims for railroad liability policies normally emanate from a railroad accident where a railroad worker is injured, the cargo is damaged, the railcars are damaged, or a member of the public is injured as a result of the accident,” he explained.
“Claims for general liability policies are similar to other contractor claims where the job was not performed properly, or other workers on the job site are injured by actions of the insured. Product liability claims can also arise from a manufacturer of railroad products.”
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