Canada to require minimum liability coverage for moving hazardous materials by rail

Federally regulated railroads that transport hazardous materials in Canada will be required to carry a minimum level of liability and compensation insurance as of June 18, Transport Canada officials announced Wednesday.

Mandatory minimum insurance requirements for railroads will range from $25 million to $1 billion (in Canadian dollars) and will be based on the type and volume of dangerous goods they carry, Transport Canada officials said in a press release.

The two middle insurance levels — $100 million and $250 million —are being phased in to provide short lines with additional time to adjust to the new requirements. Those levels will be fully implemented June 18, 2017.

In addition, the regime establishes a supplementary compensation fund financed by shippers of crude by rail. The fund will cover damages above the railroads' mandatory insurance level for accidents involving crude oil.

The strengthened liability and compensation regime for rail is part of the Safe and Accountable Rail Act.

The new measures were designed to ensure sufficient resources will be available to adequately compensate potential victims, pay cleanup costs and protect taxpayers in the event of a rail accident, said Minister of Transport Marc Garneau.