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Insurance for train accidents

No sooner had the Metro-North train plunged off the tracks in early December 2013, killing four and sending dozens to area hospitals, than a spate of lawyers lined up to sue the metropolitan New York area commuter rail line.

Their case appears to be solid. The seven-car train was traveling at 82 mph, nearly three times the safe speed for that dangerous curve. The accident not only derailed the train, it almost hurled the cars into the icy junction of the Harlem and Hudson rivers, which would have created an even bigger disaster.

And while the National Transportation Safety Board has yet to complete its investigation, it appears the engineer was at fault, with his lawyer claiming that he may have suffered from "highway hypnosis."

"The MTA [Metropolitan Transportation Authority, parent of Metro-North] owns this crash," one attorney told a Reuters reporter. And settlements could be big. One injury in a 2005 Chicago commuter train derailment resulted in a $29.5 million award, the story noted.

Insurance for train accidentsAtypical accident

But that doesn't necessarily mean that there's a big insurance payoff in store for anyone involved in a train accident.

While recent statistics from the Federal Railroad Administration Office of Safety Analysis show that at least 800 people are killed annually in railroad accidents -- with about 10 times that number injured -- few of them are dramatic multiple-fatality crashes like the Metro-North accident. In fact, that crash was the first fatal one in Metro North's 31-year history, according to Time magazine.

Far more typical is a Dec. 14, 2013, accident in Trenton, N.J., where a light-rail commuter train slammed into a car that had apparently crossed against warning signals, killing the driver, but not injuring any of the train's 28 passengers.

Half of all railroad accidents seem to occur at railroad crossings where signals may -- or may not -- be adequate, according to railroadclaims.com, a claims adjusting and consulting website. In some instances, drivers could have been racing the train to the crossing; others are attributable to rail yard accidents involving employees, and some are suicides or people who fell asleep on the tracks.

Commuter railroads tend to have accidents that are akin to minor "slip and falls," says Chicago attorney Mary Louise Kandyba, who has handled railroad liability cases for 30 years, representing commuter plaintiffs and, more recently, the railroads as defendants. The more stops a train makes, the more likelihood of accidents between the train and platform.

Personal auto insurance

Private passenger auto insurance will pay even for the dummies who try to beat the train across the tracks. A car vs. train accident claim would be treated like a car vs. car claim. Collision insurance would pay for damages to the car, minus the deductible - assuming the car owner has collision coverage. Injuries could be covered by the injured person's health insurance, or by PIP or MedPay coverage if the car owner has it.

Insurance claims for railroad accidents

Railroads generally are much safer than any other form of transportation except planes. And, unlike the crumbling highway infrastructure, railroads are experiencing a "competitive resurgence," according to a 2013 report by the American Society of Civil Engineers, which gave the system a "C+" for its $75 billion investment over the last four years.

Along with recent improvements, railroads have continued to insure against all contingencies. "Railroads are private defendants and looked upon as likely to be sued successfully," says Kandyba. "They are very conscious of coverage and in my 30 years I've never seen inadequate coverage."

The typical railroad has layers of insurance coverage, starting with its own money. Then, depending on the size of the railroad, the company will pay private insurers for excess coverage in the event of claims like Metro-North's, which could run into the hundreds of millions.

Federal law caps the maximum settlement from one accident for all defendants and claims at $200 million, but, depending on who owns the tracks and train, plaintiffs can also sue states, which have different requirements.

In addition to its own $60 million liability coverage, Metro-North and its parent have $350 million through commercial insurers, according to an MTA official quoted by Reuters.

But this is where it gets tricky. Someone injured on a commuter train has a better claim than someone struck at a rail crossing. The rationale: The commuter paid for his or her ticket, requiring the railroad to transport and keep the passenger safe.

Capping punitive damages

Establishing liability is a major concern for those who want to sue. The resulting claim of a passenger who was standing or moving between cars when the crash occurred could be affected. It's also difficult for a claimant to get punitive damages, which is a big moneymaker for the plaintiffs' lawyer and therefore could affect the claimant's ability to hire a high-powered attorney.

Generally the law restricts punitive damage claims against commuter railroads run by municipal and governmental agencies, says Kandyba. Federal law allows such damages only when there is a "conscious flagrant indifference to the rights or safety of others," such as allowing someone other than an engineer to drive the train.

There's also the issue of where to file a lawsuit. Some train systems, like Amtrak, are federal, while others operate on federally owned track, so a plaintiff can be "pre-empted" from suing on certain issues.

Settling up

In favor of the Metro-North plaintiffs' is that, despite the fact that the engineer was apparently qualified and had been checked for competence, he is still an "agent" of the railroad.

"As a general rule, the railroad would be responsible for the action of its agent," says Kandyba.

So in this instance, chances are there will be some big settlements.

More from Ed Leefeldt here

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