‘Unprecedented’ Insurance Denial Leads to Uncertain Future for Chehalis-Centralia Railroad and Museum

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The Chehalis-Centralia Railroad and Museum’s passenger service came to a screeching halt over the weekend as the railroad’s liability insurance expired at midnight on Saturday.

After its incumbent insurer “flatly refused” to quote a renewal for the Chehalis-Centralia Railroad and Museum (CCRM), the other three rail liability insurers in the market followed suit, said CCRM’s insurance broker Tripp Salisbury, of Borden Perlman McRAIL. That left CCRM with no options to secure liability coverage for its active rail operations. 

“I've been in this business for 40 years. This is an unprecedented event for me. I have never in my entire career had this happen, where we could not get … renewal coverage for a client,” Salisbury said at an emergency meeting of CCRM’s board of directors Monday evening.

CCRM announced Saturday that it would suspend all passenger operations until further notice. In the current rail insurance market, where insurers have limited capacities and are being pickier about who they insure, that suspension has the potential to last six months to more than a year. 

Getting premises liability coverage — which would cover CCRM’s physical property, including the railroad’s right-of-way and all non-revenue generating rail operations — is the first step toward getting CCRM back on track, Salisbury said. 

The insurance would serve as a “stop gap measure” so CCRM could continue some of its operations, Salisbury said. 

“I think the most important thing is to get this premises liability matter put to bed so you guys can continue to pseudo-operate to the best of your abilities, run the museum, take care of the maintenance away on the line,” he said. 

With the board’s approval, Salisbury said he could get a quote on premises liability insurance for CCRM within the next day or so. 

But to resume rail operations, CCRM needs to secure a rail liability insurance plan. And since all four major rail insurers on the market have already refused to quote CCRM for coverage, CCRM has few options for securing coverage quickly. 

The insurers’ decision not to quote CCRM for a rail liability plan decision was based on CCRM’s loss runs, which Salisbury explained were documents used in underwriting that detail losses over a period of time. 

In CCRM’s case, that loss run was $1.064 million over a six-year period. 

Major contributors to that amount were two crashes involving CCRM’s trains. The first crash occurred in July 2017 and involved a Curtis man who failed to yield right of way and collided with the passing steam train, suffering fatal injuries. The second crash occurred in October 2019 and involved a Raymond man who crashed into CCRM’s dinner train while the train was traveling backwards. 

The man filed a lawsuit against CCRM in May 2021 claiming the collision and his injuries were directly caused by the “tortious conduct” of the museum and its staff, according to previous Chronicle reporting.

Court records show that the lawsuit is still active. 

While those incidents are a dark stain on CCRM’s operation in the eyes of insurers, Salisbury said the way CCRM runs its operation was a significant factor in the insurers’ decision.  

“Every one of you I've dealt with, to this point, I've considered the dealings to be very, very good dealings,” Salisbury said. “But what you are is a group of people that have a like mindset, and that is to operate a train. I think this railroad needs to be treated and operated like a business, nuts and bolts like a business, as painful as that is going to be, as much of a change from your current foundation, your current direction, as it may be. That's the only way to make this work for the future.” 

He later added: “The days of a bunch of friends getting together and playing with trains is beyond us now. And this is a perfect example of why we need to do that.”

He recommended that CCRM expand its board to include more people with business experience. 

If CCRM does make significant changes to become more business-oriented, he said the organization could try applying for insurance again in six months or so. 

“I'd love to tell you what you want to hear. But I wouldn't be doing my job,” Salisbury said.

If CCRM makes no changes to its operations, Salisbury advised the organization to wait until the rail insurance market changes before reapplying — which could take a year or more. 

Another option Salisbury suggested was for CCRM to consider bringing in a third party, such as a freight spotter, to generate more revenue for the railroad while it works to figure out the insurance problem.

In addition to helping CCRM survive without revenue from passenger service, the additional revenue from a third-party operator would serve to make CCRM more appealing to insurers, said Salisbury. 

“I can find us an outside operator in a day … and we can work on a deal where when we get our insurance—  we can be back operating and they're out,” said CCRM member Rick Burchett at Monday’s meeting. 

Board Vice President Mary Kay Nelson also suggested using the museum or stationed rail cars as venues for events, such as reunions or weddings, to generate additional revenue once CCRM secures premises liability insurance. 

The board intends to further discuss CCRM’s plans at future board meetings, Nelson said Tuesday. 

CCRM member Daryl Lund told The Chronicle he was in favor of following Salisbury’s advice. 

“As the insurance broker said at the meeting, it is time to start running the railroad as a business and not a toy. It's very sad that they have not been running the railroad like a business and therefore lost hundreds of thousands of tourism dollars that would have benefited the community in the form of millions of dollars in economic impact,” Lund told The Chronicle on Tuesday. 

Regardless, Salisbury said he is confident the insurance issue wouldn’t be the death of CCRM. 

“I see this as a temporary inconvenience, but I don't see it as a death blow. You guys have got a good thing going. Every one of you has it in your heart,” he said.