The Limitation of Liability Act of 1851 (46 U.S.C. Chapter 305) was passed by Congress to encourage investment in American maritime commerce by protecting ship owners from ruinous losses caused by storms, pirates, and other hazards beyond their control. It caps a shipowner's liability at the value of the vessel at the end of the voyage plus freight earnings — but only if the owner proves it had no prior knowledge of the problem. The law has been invoked in major disasters including the Titanic (1912), Deepwater Horizon (2010), and the M/V Dali/Key Bridge collapse (2024). In each case, courts and regulators have scrutinized whether the privity-and-knowledge exception applies. Congress has considered reforms through the SHIPS for America Act of 2025 (S.1541), which includes amendments to the statute.