Amtrak 2015 Annual Report Download - page 36

National Railroad Passenger Corporation and Subsidiaries (Amtrak)
Notes to Consolidated Financial Statements (continued)
10. Commitments and Contingencies (continued)
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$106.6 million and $89.5 million, respectively, and are included in “Train operations” in the Consolidated
Statements of Operations.
Insurance Claims
Amtrak maintains various insurance policies to cover its liability to employees and other parties for injury
or damage resulting from accidents and to cover Amtrak’s loss resulting from damage to Amtrak property.
The insurance policies contain large deductibles; losses within the deductibles are self-insured by Amtrak.
The Amtrak Reform and Accountability Act of 1997 limited the amount railroad passengers may recover
from a single accident to an aggregate of $200.0 million. In December 2015, the FAST Act increased the
limit to $295.0 million for the Train #188 Derailment (see below for additional disclosures on the derailment).
The FAST Act also required the DOT Secretary to calculate a revised claim limit for all other railroad passenger
claims from a single incident based on the consumer price index since December 2, 1997. On January 11,
2016, the DOT Secretary issued its calculation setting the new limit at $294.3 million effective February 11,
2016. The FAST Act requires this to be adjusted every five years after the date of the FAST Act’s enactment,
so this new claim limit will remain effective through 2020. As non-passenger liability is not limited and there
is also a need to insure in the event of multiple occurrences per policy period, Amtrak purchases excess
liability insurance limits beyond the statutory cap.
Amtrak operates a majority of its passenger rail service on tracks owned by freight railroads. Amtrak
indemnifies these railroads for certain liabilities that arise as a result of its operations on freight tracks. Its
indemnity generally applies to bodily injury and property damage claims made by its employees, passengers,
and third parties struck by its trains, and for damage to its equipment. The freight railroads generally indemnify
Amtrak for bodily injury and property damage claims made by freight railroad employees and third parties,
and for damage to freight railroad equipment, lading, and property.
Amtrak holds insurance policies to insure against catastrophic events. As of September 30, 2015, Amtrak
has submitted insurance claims related to losses occasioned following Sandy totaling $1.1 billion, of which
$125.0 million has been received by the Company to date. Of this amount, $30.0 million was received during
FY2014 and $95.0 million was received in FY2015. Of the amount received to date, $15.7 million was
recognized in the Consolidated Statement of Operations in FY2015 as a reduction to “Other” expenses to
offset expenditures incurred in FY2015; and $62.8 million was recognized in FY2014, consisting of $30.0
million for business interruption and $32.8 million related to costs incurred prior to FY2015. The remaining
$46.5 million is included in the “Other liabilities” section of the Consolidated Balance Sheet as of September
30, 2015. The remainder of the claim and all future claims will not be recognized by Amtrak until further
confirmation of the assessed damages is agreed to by the insurers or additional cash is received.
On September 17, 2014, the Company filed a lawsuit in the United States District Court for the Southern
District of New York regarding insurance claims for losses following Sandy. The complaint sought declaratory
relief and alleged that in connection with outstanding claims for losses following Sandy the insurance carrier
defendants breached more than 25 first-party all-risk property insurance policies that defendants sold to the
Company in 2011. The lawsuit proceeded on an expedited schedule and the trial was scheduled to commence
on July 14, 2015.