Sidetrack Agreement

What Does Sidetrack Agreement Mean?

A sidetrack agreement is a contract between a railroad company and a property owner whose property is utilized as part of the company’s railroad track. This agreement helps reduce a portion of the railroad company’s liability.

Insuranceopedia Explains Sidetrack Agreement

Sidetrack agreements are established when the design of a railroad system impacts private property. Representatives from the railroad company approach the property owner to request permission to construct a sidetrack on their property in exchange for financial compensation.

Specifically, a sidetrack agreement includes a contract clause that protects the company from liability for any loss occurring on the property where the track is located. For example, the agreement grants the company legal immunity in property damage cases. Because this type of clause shifts risk onto the property owner, business owners who sign one should review their general liability insurance to confirm their policy will respond to incidents tied to the sidetrack area.

Property owners leasing land for commercial rail use should also factor this exposure into their commercial property landlord insurance cost, since premiums can change once an industrial easement like a sidetrack is added to the property.