The Amtrak derailment in Philadelphia last week that cost eight people their lives will not cost Amtrak more than $200 million in liability, thanks to federal American law.
According to the Amtrak Reform and Accountability Act of 1997, Amtrak’s liability for the crash is limited to $200 million for any single accident, including punitive damages. Amtrak will also have maintained minimum liability coverage for claims through insurance and self-insurance of at least $200 million per accident, per the law’s requirements.
Typically, Amtrak is self-insured for crashes, such as the 2004 crash in New York that injured more than 200 people. However, Amtrak does use Passenger Railroad Insurance Ltd., a Bermuda-based captive, to provide excess liability and property insurance coverage.
The federal limits mean victims of the crash could end up receiving payouts around half of what they would get under normal circumstances.
“It’s very much like bankruptcy,” Long Island attorney Marc Wietzke told Erie TV News. “Everyone comes in with a valid claim, but there’s only so much money to go around.”
The federal cap was put in place to spare taxpayers an additional cost for Amtrak, which is subsidized by the government. Lawmakers have previously proposed raising the limit to $500 million, but the efforts were not realized despite expensive incidents like a 2008 crash in Los Angeles that killed 17 people and caused losses of between $320 million and $350 million.
Given the deadly nature of the Amtrak disaster, and the fact that at least one of the victims had a young family, costs will almost certainly top $200 million.
“These are expensive cases,” Wietzke said.
Tuesday’s crash saw an Amtrak train travel 107mph before crashing in Philadelphia, killing at least eight people and injuring roughly 100 more. The speed limit in the section of track where the accident took place is 50mph, meaning the train was traveling twice the legal speed when it derailed.
The exact cause of the crash is unknown, and NTSB, Amtrak and insurance officials are onsite to investigate.
There were 238 passengers and five crew members on board the train when it went off the rails.
