Railroad Protective Liability Insurance: Cost & Quotes From $83/mo

In 1977, a railroad accident involving a bulldozer and a train occurred that resulted in the damage of property exceeding $50,000 and staff injury under the Federal Employers Liability Act (FELA) summing up to $30,000. This tragedy was caused by a couple of young men who drove a bulldozer and left it onto the tracks 60 feet south of the temporary crossing, where some contractors were building an interstate highway.

Later on, an insurance company issued the contractors a railroad protective liability insurance. However, the USA district court ruled against the issuance of the policy, on the grounds that this coverage was limited to ‘acts or omissions’ at the specific job location, which was the temporary crossing and NOT 60 feet away. So, you can imagine, the financial burden and crisis the losing party had to endure!

Moral lesson of the story? You ought to thoroughly understand all the terms and conditions of a policy, before signing any legal contract or making an annual or monthly payment of a policy. With that said, if you are a contractor or you own an organization or firm which conducts its activities within or on a railroad and you are looking for answers on railroad protective liability insurance; then read on.

What is Railroad Protective Liability Insurance?

This railroad protective liability policy is abbreviated as RRP. It is a coverage that every contractor, organization, or firm must have to carry out its work or activities on or about 50 feet or 15.24 meters within a railroad property.

Railroad protective liability endorsement does NOT cover the contractor, rather it covers the railroad entity from any physical damage that may be caused by the policyholder. Hence, the insured is the railroad owner and not the contractor. It’s also not designed to replace or act in the place of the commercial general liability insurance policy.

Please note that before filling out a railroad protective liability coverage form, you must provide your preferred insurance company or agent with the following intricate details:

• The precise location of your job

• The work or activities you intend to carry out

These details are used to underwrite and complete a policy declaration that meets all the requirements of the Railroad Insurance Management Association. It’s also important to note that this policy must be an International Organization for Standardization (ISO) form.

A Railroad typically requests that some kind of hold harmless agreement that indemnifies (compensates for a loss) the railroad, in case the insurance RRP doesn’t apply. This is so because railroads are expensive thus, they require broad indemnification agreements.  Needless to say, its crucial that before signing the hold harmless agreement, contractors ought to make sure that this agreement doesn’t contain some limiting contractual endorsement when it involves the railroad’s sole negligence.

How Long Does a Railroad Protective Liability Remain Valid?

A railroad contractors liability insurance will only remain valid if any of the below conditions remain unmet or are not fulfilled:

• The RRP expiration date has not yet matured or arrived

• The intended work or project to be done has not been completed

• The terms and conditions of the RRP contract are yet or have not been fulfilled

How Does RRP Differ From Owner Contractor Protective Liability Insurance?

The OCP and RRP look similar in that both policies are purchased for the benefit of the railroad. Both only apply solely when the operations are in progress and they are site-specific (the coverage ONLY applies to the location where the job is being carried out). Despite the railroad protective policy being almost similar to the owner protective liability insurance (OCP), there is one distinguishing feature that sets these policies apart.

An RRP differs from an OCP in that the latter offers limited coverage to the negligent liability of the policyholders, whereas RRP covers a bit more since it provides its policyholders with bodily injury or property damage coverage. Important to note is that for the RRP to be used a bodily injury or property damage MUST be directly related to, or is in connection with, the activities or work carried out by the contractor or any other subcontractor to whom the RRP is issued.

Clarifying the Ultimate Misconceptions About Railroad Protective Liability Insurance

Like most legal contracts, the railroad protective liability policy is not exempted from misconceptions. Getting acquainted with these misunderstandings will not only save you from making a fatal financial decision but will also shield you from incurring costs that were supposed to be covered by your insurance provider. Together, let's bust some of the most common RRP misconceptions:

• Commercial general liability can be used in place of railroad protective liability insurance. The fact is that both these two policies are separate entities and cannot in any way be used interchangeably

• The owner-contractor liability insurance is synonymous to railroad protective liability insurance. Even though, these two have a number of similarities they also have a major difference that distinguishes them apart

• You cannot purchase the railroad protective liability coverage form if your working area is on or within 50 feet of a railroad. We point of fact, this is what the RRP stands for

What Costs Does Railroad Protective Liability Insurance Cover?

Below is a list of some of the costs covered under the railroad protective liability coverage:

• Bodily injuries caused by a derailment

• Property damage or loss occurring due to a derailment

• Physical damage to the railroad’s actual property

• Legal fees in regard to defense expenses that are outside the RRP policy-these fees include, legal paperwork, investigations to be carried out during a lawsuit, and court filing fees

• Foreign rolling stock-these are losses incurred by rail cars not owned by the policyholder

• Evacuation expenses- these are cleanup costs that are incurred after the spillage of environmental or bio-degrading substances such as petroleum oils and other poisonous chemicals

• Federal Employees Liability Act Coverage-this acts like the workers’ comp policy in the railroad industry. The RRP compensates railroad workers for any claims while on the job

What Are the Target Business Lines for Railroad Protective Liability Insurance?

Any business that works on or near a railroad should purchase a railroad protective liability coverage. Below is a list of some of the actual business lines or niches that will best benefit from a railroad protective liability application:

• Rail Service Companies

• Railcar Lessors and Lessees

• Railroad Contractors

• Tourist and Excursion Railcar owners

• Transit and commuter rail systems

• Truck Owners

• Freight Shipment Companies that deal with shipping cars, highly explosive substances and chemicals such as dynamite and gasoline

Railroad Protective Liability Insurance Cost

The average cost of RRP is $250 per month or $3,000 per year. Before the cost of RRP is made, an insurance company considers several factors. What follows is a list of factors that are used in the calculation of railroad protective liability cost:

• How much the project to be carried out costs

• The number of tracks in proximity to the contractor’s working area

• The estimated number of freight and passenger trains that will pass by the contractor’s working area

• The projected cost of work that will occur within the vicinity of the railroad’s property

• The specific location of the project or the scheduled railroad

In connection, here’s a table showing the further railroad protective liability insurance cost estimates based on the rates of the best companies: