RMS Titanic Insurance Claims
It has been exactly 100 years since the pride of the White Star Line, the RMS Titanic, struck an iceberg in the Atlantic Ocean and sank with the loss of more than 1,500 lives.
The centenary has prompted many insurance companies on both sides of the Atlantic to publish documents related to the largest maritime loss to date in relative costs, mostly showing your company’s involvement in paying claims.
When the Titanic sank on April 15, 1912, the Lutine Bell was touched at Lloyd’s of London and a very rapid claims process was initiated.
A few months earlier, the ship’s owners, White Star Line, had instructed insurance brokers Willis Faber and Co. to seek coverage for the ship’s hull, cargo, contents, and personal effects. Willis Faber passed the ‘slip’ to his Lloyd’s mercantile division, where it was assessed and subsequently underwritten by multiple syndicates and insurers acting on behalf of members.
The hull of the Titanic was insured for total losses of $ 5 million or just over a million pounds sterling at the exchange rate of the time. The policy also included total loss coverage for cargo at $ 600,000 and contents at $ 400,000, a value equivalent to two hundred thousand pounds.
The original sales receipt that passed through Lloyd’s was lost, but it was photographed and can be seen in Wright and Fayles’ 1928 book “A history of Lloyd’s.” It shows that seven large insurance companies assumed almost 40 percent of the risk between them and the other 60 percent was underwritten by more than 70 people and Lloyd’s “Names.”
According to documents recently released by Willis, the marine insurance policy cost White Star £ 7,500 or $ 38,000 to insure the Titanic at a rate of 15 shillings per hundred. Modern rates for cruises are considerably lower.
The Ship was significantly underinsured worth only five-eighths of its replacement cost. This was apparently because the owners thought the hull was unsinkable and were willing to bear the additional $ 3 million of risk themselves.
Willis claims that even though the owners believed the ship to be unsinkable, they had trouble fitting the entire hull cover at Lloyd’s and about £ 40,000 was underwritten in Germany. There was also an extremely high excess or deductible of 15% of the insured value.
Four days after the sinking of the Titanic, the United States Senate conducted a preliminary investigation at the Waldorf Hotel in New York. The surviving officers from the ship presented their evidence to the panel describing the events of the sinking and signed what is called a “protest” allowing insurance claims to be paid.
Unbelievably, White Star was reimbursed for the loss of the hull within seven days of the sinking, presumably minus the excess, and was fully paid for cargo and content losses within thirty days.
However, they were highly underinsured for their liability to third parties given the value of the people on board. The claims against the company exceeded their coverage by more than $ 1 million and whether they had private P & I accident coverage for personnel liability remains a mystery. Suffice it to say that the payments to the families of the lost crew members were negligible.
Claims for the loss of people amounted to more than five times the value of the ship, for those lucky enough to have life insurance policies or take out personal accident coverage for travelers. Although there were no disputes over the loss of life, the families had to wait much longer than White Star to obtain compensation.
The final payment for human losses has never been fully claimed, as more than one hundred and fifty different accident life insurance companies participated in the coverage, on both sides of the Atlantic. American businesses took the lion’s share of the claims, due to the many wealthy businessmen and millionaire family members who drowned.
The total loss is estimated to be in the region of $ 20 million and one of the largest payments was made by Hartford’s Travelers Insurance insurance company, which paid a life policy for more than $ 1 million.
The sinking of the Titanic also prompted the first and only insurance claim for a car struck by an iceberg, by a Mr. William Carter who claimed $ 5,000 for his 25-horsepower Renault, lost at sea.
