Cruise Crash Will Cost Millions
MIAMI (CBSMiami) – The Costa Concordia disaster could cost hundreds of millions of dollars to Carnival Corporation and its insurers.
According to Bloomberg.com, Carnival's accident may cost insurers up to $800 million by the time all claims are paid and the ship is finally removed.
"It is a very unusual occurrence," said maritime attorney Michael Black. "You don't see boats sink, almost over."
Black has a history with ship problems. He represented nearly a dozen passengers who settled with Royal Caribbean after a ship grounded in Saint Maarten.
"Typically when something like this happens is the passenger made whole? Almost never," Black said. "If the fullest extent of the law is enforced, they are only probably only getting a portion of what their losses are worth."
Bloomberg reported the total insurance loss is somewhere between $600 and $800 million with the cruise ship's hull insurance expected to pay out roughly $512 million.
Still, Black said cruise lines are on the hook to payout just a portion of what you lose in your cabin, which means more than likely, you'll take a loss.
"Even if you die or have severe injuries, the Athens convention only provides for $70,000 per passenger," Black said. "People don't realize that the terms and conditions on the back of these cruise line tickets are fully enforceable. Even in those fine print letters, the courts do enforce them."
And since this accident happened on a Mediterranean cruise, an Italian court will likely be in charge of any payouts.
"You are limited by the laws that apply over there," Black said. "Even though you are as U.S. passenger on a U.S. cruise line."
According to the Bloomberg report, Carnival has liability coverage as high as $3 billion. The insurance costs are likely to be spread across multiple insurance companies.
Black said that cruise lines typically offer a full refund and sometimes even a free cruise.
"It's always strange to me that passengers would actually accept that, but on the flipside, some people may not have a claim that's as significant as others would."
Still, Black said it's best to consult a lawyer before accepting any payout or deal from the cruise line.
Black continued saying that if the cruise company will pay out more than $70,000; lawyers have to prove the captain was grossly negligent and intended to run the ship aground.
There is typically a one-year limit to file a claim after a shipwreck.
