August 22, 2013 / 2:51 PM / 5 years ago

Canada Senate urges minimum insurance levels for railways

OTTAWA, Aug 22 (Reuters) - Canada should force railways to take out enough insurance to ensure they can cover damages caused by major incidents, the Senate said on Thursday in a report issued after last month’s train disaster in Quebec, which killed 47 people.

The recommendation was one of 13 in a Senate report on transporting oil and gas by pipelines and rail. The Senate is Canada’s unelected upper house of Parliament.

A train operated by Montreal, Maine & Atlantic Railway derailed and blew up in the Quebec town of Lac-Megantic on July 6, killing 47 and destroying the town’s downtown. Last week Canada moved to shut down the railway, saying it did not have enough insurance to pay for the clean-up costs.

Under federal regulations in Canada, there is no set minimum or maximum amount of insurance coverage required for rail operators. Coverage is based on a risk assessment carried out by the insurance company and the railway.

The Senate said the transport ministry should “apply appropriate minimum liability coverage thresholds to ensure rail companies have the financial capacity to cover damages caused by a major incident”.

Transport Minister Lisa Raitt needs time to look at the report and its recommendations, a spokeswoman said.

The Senate, which started work on its report well before the fatal crash, also called on the transport ministry to work with the U.S. Department of Transportation to review the use of DOT-111 oil tanker cars, which were involved in the Lac-Megantic crash.

The cars are known to be vulnerable to leaks and deadly blasts.

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