Railroad Liability Insurance



With approximately 650 railroad companies and about 150,000 miles of standard railroad track in the United States, it's no wonder that there is a market for railroad liability insurance. Railroads are big business in the transportation industry, moving 40% of the nations freight while emitting only 2% of all the greenhouse gasses that are related to transportation. A group of trains that moves that much freight is bound to have occasional accidents and need insurance. Accidents that result in derailments and collisions have the potential for creating large scale liability when chemicals are released into the environment. Good liability insurance covers at least environmental pollution, evacuation expenses, general liability, and bill of lading liability.



Before beginning this article, one might have thought there were only a few railroad companies, including Union-Pacific, Santa Fe, and Burlington Northern. Almost all railroads were short line in the early years. But, yes, many merged to create the larger mainline railroads. However, since 1980, mainlines sold less profitable portions of track to create more short lines that could operate with less revenue because they had lower expenses. Lower expenses are partly a result of lower liability insurance costs by comparing policies and getting the best policy for the money. So now that you know there are over 600 railroads, it's easy to see that it is a competitive business, with many smaller short line railroads that are in a position to vie for the best rates on insurance coverage and create a good market that keeps rates low and competitive

Short lines are not very large and own smaller sections of track. All railroads are divided into various classes by the Association of American Railroads, based on revenue. Classes are redefined by the National Transportation Board every few years. The big mainline railroads that move freight are class 1, and the smaller railroads are either class II (less than about $20 million in revenue), or class III (less than $277.7 million and more than about $20.5 million in revenue), depending how the class is defined at any particular time. One of the functions of short line railroads is to operate excursions where tourist or others wishing for a short get away can enjoy dinner and a midnight cruise. So, railroads need insurance that covers accidents to passengers, as well. General liability insurance can cover many issues, but railroad liability insurance is needed to round out the liability.