It’s more than two years since 26 March 2024, when the Dali container ship struck the Francis Scott Key bridge, causing its collapse. The Singapore-flagged vessel lost power shortly after departing the port of Baltimore, before colliding with the bridge. Six construction workers were tragically killed during the incident, and the Port of Baltimore suffered significant disruption.
In the months following the incident, speculation centred around whether the shipowner could limit their liability (opens a new window) to $44m (regardless of the actual liabilities faced), or whether they could face uncapped claims that were, at this stage, estimated to be in the region of $2–4bn. If the latter, it would represent the largest P&I claim in history.
The outcome hinged on two legal questions: firstly, would claims for consequential loss be supported by US law; and secondly, would the US federal courts allow the shipowner to limit their liability at post-casualty value of the vessel and cargo? To do so, the owner must prove they lacked ‘privity [HF3] or knowledge’ of the condition that caused the casualty – often a difficult test to satisfy.
“The question remains as to whether or not the owner of the Dali can rely on the 175-year-old maritime statute to limit their financial responsibility.”
At the time, we asserted that, had the casualty related to a singular unforeseen power failure, then the limitation action may succeed. However, a previous power failure experienced by the Dali prior to the collision had the potential to significantly weaken the owner’s case, by suggesting awareness of an underlying issue.
What’s happened since 2024?
Several claims have now been resolved with the following settlements reached:
October 2024: Vessel interests agreed to pay $102m to reimburse federal clean up and wreck removal costs to settle a lawsuit brought by the US Department of Justice.
May 2026: State of Maryland reached a civil settlement of $2.25bn with the ship’s owner and operator for maritime negligence, wrongful death-related damages, infrastructure losses (i.e. the bridge itself), environmental damage and economic impact resulting from the collapse; settlements also reached with families of the deceased workers and a survivor, Baltimore Gas & Electric and Brawner Builders.
However, several claims remain outstanding. These include:
The City of Baltimore
Baltimore County
Businesses impacted by the port closure
In addition to this the State of Maryland is also pursuing claims against Hyundai Heavy Industries (as shipbuilder).
The civil trial began in the US Federal Court on 1 June 2026 and is focused on whether the shipowner (Grace Ocean) is entitled to cap their liability under the Limitation of Liability Act 1851. Parallel criminal proceedings are also underway against parties in connection with the ship’s operation.
Despite some of the overall liability being settled, the question remains as to whether or not the owner of the Dali can rely on the 175-year-old maritime statute to limit their financial responsibility. The outcome will have a significant impact on the remaining claims and will likely set an important precedent for the litigation of maritime casualties in the US going forward.
Could there be an overspill call?
As is clear from the settlements and pending settlements, this would already appear to be the largest P&I claim in history. Subject to the outcome of pending legal proceedings, there is clearly potential for this claim to reach the collective overspill layer (reinsurance), or to exceed it and produce the first overspill call on record.
For the policy year in which the incident occurred, there is a $1bn collective overspill layer excess of $2.35bn (subject to one reinstatement). Over and above that $1bn limit, P&I clubs can, under their Rules, levy an overspill call on members in the year to which the claim relates, or pay their share from the club’s Free Reserves. A member’s overspill contribution would be capped at 2.5% of each vessel’s property damage limitation fund under the 1976 London Limitation Convention (LLMC). The tonnage-based limit is measured in SDR (Special Drawing Rights), which is subject to exchange rate fluctuation
Once notice of an overspill call has been given, the relevant policy year remains open until the IG clubs vote for its closure by way of a 75% majority. The extent to which an overspill call can be funded depends upon the success of collection by the clubs. For following clubs, the extent of their contribution is limited to the proportion collected by the club bringing the claim; if the club whose member has suffered the loss recovers only 80% of its share of the claim, then other club contributions are also limited to 80%.
Will it impact GXL renewals?
Although the Group Excess of Loss (GXL) renewal in 2025 was relatively benign, it did not fully account for the $2.85bn settlements made to date. It therefore seems prudent for owners to budget for a 20–25% increase in Group reinsurance rates for the 2027 P&I policy year. The extent to which the container sector will bear a disproportionate element of the overall increase is yet to be determined.
Notably, the collective overspill layer presents a fundamentally different risk profile to the more frequently exposed lower layers of the GXL programme. At renewal, it will therefore be interesting to see whether the prospect of a first-ever overspill call alters reinsurers’ risk appetite for the overspill layer.
In response to some of these developments, possible changes to the programme from 2027 may include:
Increasing Pool participation, thereby pushing up the inception point of the GXL programme
Providing greater protection by increasing the 2nd, 3rd, or collective overspill layers of the GXL programme
Although more speculative, with a change in structure, there is also the potential to increase the existing $2bn passenger sublimit
Broader renewal outlook
As we approach the midway point of the policy year, it’s worth noting the other factors that are likely to impact the 2027 renewal:
Pool activity has been relatively benign so far – although it is still very early in the year, with the northern hemisphere winter yet to come.
Investment returns remain volatile and appear more modest than in recent years amid continued geopolitical uncertainty. If this continues through to the end of the policy year, the clubs may not benefit from the cushion that such returns have hitherto provided.
For more information or advice about your forthcoming renewal, reach out to a member of our Marine Protection & Indemnity (opens a new window) team.
