Workers start to clear twisted metal and concrete of the collapsed Francis Scott Key Bridge in Baltimore on March 31. Jonathan Newton for The Washington Post

The Baltimore bridge collapse could cost up to $4 billion in insured losses, which would make it the most expensive incident involving a ship collision for insurers in modern history.

The crash of the Dali container ship into the Francis Scott Key Bridge last month killed six workers and demolished the structure. It wasn’t the deadliest maritime disaster, but the lengthy closure of the Port of Baltimore and larger insurance purchases by shipping companies aiming to protect against supply chain disruptions and global conflicts could send the final tally soaring.

“This is the biggest claim that we’ll likely see in marine insurance,” said Brian Schneider, senior director at Fitch Ratings’ North American insurance rating arm, who expects the final total to come in between $2 to $4 billion in insured losses.

That could make it more expensive than the capsizing of the Costa Concordia in 2012, Schneider said. In that case, a multistory cruise liner carrying more than 4,000 passengers and crew ran aground and capsized off Italy’s west coast, killing 32 people, which ended up costing $2 billion – the costliest maritime disaster so far.

The company responsible for paying the insurance losses for the bridge damage and negligence of the Dali is International Group of P&I Clubs, which also has reinsurance that provides marine liability coverage to the Dali. This insurance policy will cover damage to the bridge, as well as wreck removal, loss of life and negligence of the Dali.

Repairing or replacing the bridge will be expensive, as the price of steel has been going up, said David Osler, insurance editor at Lloyd’s List, a shipping news company.

“It will take a heck of a lot of steel to repair that bridge,” Osler said.

The hull damage, pollution and cargo losses were insured separately in the market as property coverage. Generally, most shippers also get a separate insurance product to cover business interruption, which could add to the losses, given the busy Port of Baltimore. It’s not confirmed at this point if the shippers or the Dali have business interruption insurance.

“The Port of Baltimore is the busiest port for car shipments in the U.S.,” said Schneider of Fitch. “That could impact a lot of business-interruption policies, such that there will be liability for all the shipping that is not taking place now.”

Rating agency Morningstar DBRS said the losses will add to the woes of marine insurers, who have been facing several serious challenges in recent years. The pandemic, the war in Ukraine, piracy in the Horn of Africa and Gulf of Yemen, and a string of attacks from Houthi militants in the Red Sea have created a “perfect storm” causing the shipping industry to buy more insurance, experts said.

“The trade interruptions caused by the pandemic have meant that shippers have become more aware of the need to have supply chain insurance, which is a relatively new product,” said Marcos Alvarez, head of insurance at the rating firm DBRS Morningstar.

The Panama Canal is taking longer to cross because of some drug trade issues, Alvarez said. And the Red Sea piracy issues are diverting 80% of traffic south of Africa, adding 10 to 14 days to trips, “meaning more costs, more fuel, more insurance,” Alvarez said.

Apart from the added value of the journeys, some shippers are also adding insurance to protect against a phenomenon known as “social inflation” – in which juries hand out more generous payouts to those who bring claims for negligence and escalating settlement awards, insurance experts say.

The families of the six bridge workers who died in the crash are expected to file a lawsuit over the incident, Alvarez said.

“There will be worker compensation lawsuits, there will be life insurance settlements, and, of course, the boat insurance will be in play,” he said. “And this is happening in one of the most litigious jurisdictions in the world, the U.S.”

One possible reprieve for insurers could come from a little-known maritime law from 1851 called the Limitation of Liability Act, which caps the ship’s liability to the post-accident value of the boat and its cargo. The owners of the Titanic used this law to limit how much they were forced to pay out after the ship sank in 1912. That same law could cap how much insurers have to pay for the damage to the boat itself. However, the liability cap probably won’t hold down insurance payouts for the bridge or the interruption of business for the port or for other shippers, Alvarez said.