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HULL INSURANCE: This insurance covers damage to the ship. Carnival is responsible for the first $30 million in damage. The rest is covered by a network of insurers led by XL Group, an Irish insurer with executive offices in Bermuda. A company spokeswoman refused to comment. German insurer Allianz Global said it has a "minor stake" in the Concordia claims. A third firm, London-based RSA Insurance Group is liable for up to $15 million, according to an industry source. Other yet unnamed companies also will have to pay out claims. Chicago-based Aon Corp. brokered the hull insurance deal but a company spokeswoman refused to comment. "The amount of this hull claim will heavily depend on whether the ship can be salvaged and repaired or whether, in the worst case, the wreck will have to be disassembled on site," Allianz said on its website. LIABILITY INSURANCE: The second type of insurance coverage purchased by Carnival is for personal injury liability. The company said in a statement Monday that it has a $10 million deductible on that policy. That coverage would include any payments related to injuries and deaths of passengers and crew, the cost to clean up any leaking oil and the loss of cargo. Claims would be paid out even if the ship's captain is found to be negligent. The cruise company has said that Capt. Francesco Schettino deviated from his approved course. Later, an Italian coast guard officer ordered Schettino back on the ship to assist in the rescue. Cruise lines and shipping companies join together in groups, known as protection and indemnity clubs, to spread out their individual risk. Each member of the club pays in dues and then claims are paid out from the collective funds. Carnival insured the Concordia through two clubs. The first, which has the bulk of the liability, is the Standard Club, according to a spokesman for the group. The second is through a club called Steamship Mutual. After Carnival pays its $10 million deductive, these two clubs are responsible for the next $8 million in combined liability claims. The next $52 million in claims would be paid out by a larger collective called the International Group P&I Clubs, which represents 13 of the clubs, which insure more than 90 percent of the world's ocean shipping. After that, there is a reinsurance policy taken out with large firms that would cover losses up to $3 billion, according to the Standard Club. Reinsurance companies protect insurance firms against catastrophic losses. Carnival did not take out insurance for loss of use of the ship. The company said it expects lose $85 million to $95 million in bookings.
[Associated
Press;
Associated Press business writer David McHugh in Frankfurt, Germany, contributed to this report.
Scott Mayerowitz can be reached at http://twitter.com/GlobeTrotScott.
Copyright 2012 The Associated
Press. All rights reserved. This material may not be published,
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