By Daniel Warn / [email protected]
The Chehalis-Centralia Railroad and Museum (CCRM) successfully secured premises liability insurance last Friday, April 8, allowing railway workers to return to work at the site.
The move marks the first step in the organization’s reopening for revenue-generating rail passenger service after all operations closed on March 6.
CCRM lost all of its liability insurance in March after its insurance broker was unable to obtain a new policy.
To resume rail operations, the CCRM must take out rail liability insurance. With the four main rail insurers in the market refusing to quote CCRM for cover, the organization was faced with limited options.
A factor in the loss of liability insurance was CCRM’s loss streaks, which amounted to $1.064 million over six years. Two accidents involving CCRM trains contributed to this amount. There is currently legal action against CCRM regarding one of the incidents.
That said, CCRM never lost property insurance on the facility itself to protect against property damage, even though it had no form of liability insurance until April 8.
“We have property insurance on our facility, and as of Friday we have liability insurance,” CCRM President May Kay Nelson told The Chronicle earlier this week. “Property insurance would only cover if something happened, like a fire or whatever to the engine. But liability will protect it with people working on it. And that’s what we put in place on Friday.
The palliative measure amounts to $1 million in event coverage and $2 million in global coverage.
Event-based insurance covers losses that occur during the period that an entity has a given policy, regardless of when a claim is filed, and aggregate insurance represents a limit in an insurance policy stipulating the maximum an insurer will pay for all reported covered losses during a specified period — usually one year.
“This amount of insurance is normal and customary for property and for liability on that property,” Nelson said. “It is not enough for passengers who generate income. We won’t do that until we can get our track repaired.
Indeed, Nelson said the main reason the organization hasn’t called for a new rail liability plan is that the rail itself is in a state that needs extensive repairs.
January floods washed out about a mile and a half of track. According to the minutes of the meeting of the board of directors of the CCRM on Wednesday, the work of repairing the track could begin as early as June.
With workers back on site, the CCRM is in full swing, Nelson said. The organization is renovating one of its coaches, replacing the carpet.
“We ripped the whole interior,” Nelson said. “And (we) replace the interior of one of the passenger cars.”
This is followed by what Nelson called CCRM’s “track maintenance,” that is, clearing and repairing the tracks.
“So we have sleeper replacement work that we need to do and are expecting this month. So it’s a project that’s ongoing,” she said. “We are continually replacing ties.”
And to fix the washed-out track, the organization is turning to FEMA for help.
Premises liability insurance allows all of this work to take place, but Nelson said there is no current timeline for obtaining liability insurance for passenger rail passage generating income.
“We don’t know (the schedule) because we don’t know when we can fix the track,” Nelson said. “So until the track is fixed, we can’t do that.”
The subject of CCRM’s insurance situation came up at the Chehalis Town Council meeting on Monday, as CCRM leases its steam engine to the town as well as land.
Decades ago, Chehalis had parked the steam engine in a local park, and when the CCRM needed the machine to begin operations, the city leased it in the 1980s with the requirement of a $1 million liability insurance for the rail pass, which has since escaped being updated.
Councilor Daryl Lund raised concerns at Monday’s meeting about the initial amount of liability insurance the city was requiring from CCRM for its use of the steam engine for passenger rides.
“A million dollars is not enough money to protect the city,” Lund told his fellow advisers. “I hope my fellow board members, since (CCRM) breached their contract by not having insurance, we are considering raising it to at least $5 (million) or $10 million liability, required on everything we have there.”
In an interview with The Chronicle, Lund opened up about it.
“When they leased that engine to the band, $1 million was a lot of money. It’s not a lot of money today. A million dollars isn’t much money anymore. And for protect the city, I think it should be increased to at least $5 million,” he said.
During the council meeting, Chehalis Town Manager Jill Anderson signaled an agreement with Lund, citing the last time the engine lease was extended.
“With the agreements that were extended in 2017, it was identified at that time that the amounts (of liability) were low,” Anderson said. “There was a funding opportunity from the state, so time was running out, but it was recognized that our insurance needs are quite low. They should be updated, and that provides a opportunity to do so.
Anderson told The Chronicle that negotiations for a new lease agreement with increased liability requirements on engine passenger service could be completed within six weeks, depending on the city’s bandwidth.
Asked about Lund’s asking price for an increase in liability requirements, Nelson told The Chronicle: “He’s right in that we want to look at a policy of $5 (million) to $10 million when we take over the traffic.”
Ultimately, Lund told The Chronicle that CCRM’s closure didn’t do anyone any good.
“The train brings a lot of people here. It’s kind of an institution now,” he said. “But, you have to run things like a business. You can’t blame the town that’s hanging out there because the town is the one with the deep pockets, and if anything happens, they’ll go after the train and the town and whoever it is. they can catch. It’s good business to protect everyone.
Former CCRM President James Folk resigned from the organization last month, citing a dispute within the organization’s board which he says is hampering CCRM’s ability to recover from its crisis current.
“This organization is doomed and I will not be a part of that failure,” Folk wrote in the email provided to The Chronicle.