Insurers Seek Subrogation Against Norfolk Southern Over Ohio Train Derailment

Four insurance companies filed a subrogation lawsuit against Norfolk Southern in federal court last week, alleging the rail carrier’s negligence led to the 2023 East Palestine, Ohio train derailment and subsequent fire, explosion and release of toxic chemicals.

Erie Insurance Company and Erie Insurance Exchange (collectively Erie) and Homesite Insurance Company of the Midwest and American Family Insurance (collectively Homesite-American Family) are plaintiffs in the lawsuit, filed in U.S. District Court for the Northern District of Ohio.

The plaintiffs allege that a Norfolk Southern train carrying abnormally dangerous and ultrahazardous chemicals was experiencing a fire at 8:13 p.m. of the loss date, Feb. 3, and that location video from cameras located along the rails in Salem, Ohio, showed a wheel bearing in the final stage of overheating approximately 45 minutes before the derailment.

Related: NTSB Proposes Sweeping Safety Changes After 2023 Ohio Train Derailment

The insurers further allege that a hotbox detector used to assess the temperature conditions of railcar wheel bearings registered an alarm message instructing the crew to slow and stop the train to inspect the hot box. The malfunctioning railcar hot box is consistent with an overheated wheel bearing, which ultimately caused the train to derail and trigger the application of the emergency brakes as the train passed through East Palestine, the lawsuit says.

The train derailed at approximately 8:55 p.m, causing a fire, explosion and the of spill 100,000 gallons of hazardous materials.

The resulting damage led to real and personal property, loss of use, loss of income as to insured businesses, and other covered damages. The plaintiffs say they paid claims to insureds in excess of $75,000. Erie name 19 insureds to which it has made claim payments, while Homesite-American Family Insurance list three insureds to which it has paid claims.

Related: Norfolk Southern to Pay Civil Penalty, Cleanup Costs Over 2023 Ohio Derailment

The plaintiffs filed counts of negligence, strict liability, statutory nuisance, private nuisance, public nuisance and trespass. The insurers allege that Norfolk Southern failed to properly maintain, service and inspect their trains and railcars, failed to maintain vigilant lookout during the operation of its trains and railcars and failed to timely detect the fire on the tank car that led to the derailment.

Norfolk Southern came under fire this week by the chair of the National Transportation Safety Board, who said the rail carrier threatened the NTSB board, sought to manufacture evidence and failed to provide documents during its investigation of the East Palestine derailment.

NTSB Chair Jennifer Homendy said in a hearing that the railroad “delayed or failed to provide critical investigative information to our team,” calling Norfolk Southern’s actions “unconscionable” and “reprehensible.”

Related: Norfolk Southern to Pay $600 Million to Settle Ohio Spill Case

In anticipation of this week’s hearing, Norfolk Southern announced last Friday it will examine its vent and burn decisions. The NTSB said on Tuesday that the rail carrier did not need to vent and burn hazardous materials from tank cars after the derailment.

Norfolk Southern last month agreed to pay the government a $15 million civil penalty and more than $50 million in past government cleanup costs over the derailment. The Atlanta-based rail carrier is estimated to face a $1.7 billion in total costs associated with the derailment.

Top photo: This photo taken with a drone shows portions of a Norfolk and Southern freight train that derailed in East Palestine. (AP Photo/Gene J. Puskar)