by Donald Wood
Last updated: 4:00 PM ET, Thu October 15, 2015
On Wednesday, Amtrak officials announced that the rail company had obtained $275 million of natural disaster insurance protection.
The new insurance will cover any damage caused by a natural disaster-such as storm surge, wind damage or earthquakes-to the Amtrak-owned infrastructure in the critical Northeast Corridor.
Amtrak received the insurance protection from PennUnion Re Ltd. through a Bermuda-based insurance company that it owns called Passenger Rail Insurance Liability. The two sides have officially agreed to a contract that will provide the catastrophe protection.
Amtrak Executive Vice President Gerald Sokol, Jr. released a statement about the new insurance, saying, "This is the first time Amtrak has used the capital markets to broaden our base of insurance coverage. The catastrophe bond market provides us with a means to diversify our sources of insurance in a cost effective manner."
The natural disaster insurance will help provide "a capital markets source of insurance risk capital" that can be used as protection by Amtrak in the case of a catastrophe like the east coast faced during Hurricane Sandy in 2012.
During Hurricane Sandy, a storm surge force sea water into the Hudson River tunnel and the East River tunnel, causing more than $1 billion in damage. The new insurance would protect Amtrak in the event of another natural disaster and give the company the money needed to get its trains up and running as quickly as possible.
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