Commercial Auto Insurance–Nuclear Verdicts

The rise of “nuclear verdicts” has significantly impacted the landscape of commercial auto insurance. These legal judgments, often exceeding $10 million, have created a ripple effect throughout the insurance industry.

The Rise of Nuclear Verdicts

Nuclear verdicts have become increasingly common over the past decade, driven by several key factors. One of the primary drivers is social inflation, which represents a shift in public opinion towards holding corporations more accountable. This shift has led to jury awards growing at a rate significantly higher than economic inflation.

Another contributing factor is the rise of third-party-funded litigation. This relatively new development removes some financial constraints that previously limited the ability to stage legal battles against corporations. With third-party funding, plaintiffs can pursue more aggressive legal strategies, leading to higher verdicts.

Additionally, increased advertising efforts by plaintiff attorneys have reshaped jurors’ perceptions of “normal” damages, further driving up the size of awards.

The Impact on the Insurance Industry

Nuclear verdicts directly affect insurers, leading to higher loss ratios and lower profitability. To mitigate these impacts, insurance carriers are revisiting their rates and tightening underwriting standards. Businesses seeking commercial auto insurance may face higher premiums and more stringent coverage requirements.

Finding a market willing to insure their risk becomes more complex, especially for those with exposures more prone to nuclear verdicts. Second, once coverage is secured, the cost will likely be significantly higher than in the past. This financial burden can be particularly challenging for small and medium-sized businesses that rely on commercial vehicles.

Contact Us

Contact Florida Insurance Group to learn more about the hard market and how it may affect your company’s rates. Our team can help you compare quotes from reputable Florida insurers.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.