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What are ‘nuclear verdicts’ and why are they increasing?

‘Nuclear verdicts’ are increasing in frequency and getting bigger all the time. But what are ‘nuclear verdicts’ and why are they increasing?


In a May 21, 2021 article on riskandinsurance.com, entitled “COVID-19 and Nuclear Verdicts: Disastrous Combination or Phantom Fear?” author Kiara Taylor noted: “Although a generally accepted definition of a nuclear verdict is one that exceeds $10 million, this arbitrary damages threshold fails to capture the problem adequately. A nuclear verdict is the classic disproportionate response: it so far exceeds a reasonable damages amount that only emotional or punitive juror motives can adequately explain it.”


Social Inflation, Nuclear Verdicts, and Industry Turmoil


Taylor goes on to identify a relationship between nuclear verdicts and another disturbing industry trend– social inflation. Put simply, litigation, insurance costs, and premiums all increase as society’s perceptions about what insurance covers expands.  As Taylor notes: “Social inflation and nuclear verdicts feed off each other in a vicious cycle of more frequent and escalating damages awards.” This poses enormous issues for the insurance industry.  With juries rendering more nuclear verdicts, insurance costs are increasing significantly, resulting in skyrocketing premiums, “which in turn threaten the continued existence of insurance industry clients, with the trucking industry offering a prime example.”


Jury delivering a nuclear verdict to the court.
The assertion that damages awards are escalating is well-supported by research.  According to a June 2020 research paper published by the American Transportation Research Institute (ATRI), entitled “The Impact of Nuclear Verdicts on the Trucking Industry”, the average size of verdicts from 2010 to 2018 increased from just over $2.3M to just under $23M – an increase of nearly 1000%.

Escalating Damages and Industry Implications


While there have been multiple nuclear verdicts over the last decade, with the largest ones ranging from $90 million to over $280 million, they were all trumped in a big way this past summer by a Florida jury that reached a verdict of $1 billion in a case involving a fatal trucking accident in 2017 wherein a teenager was killed by an inattentive truck driver while stopped in traffic for an accident involving another inattentive truck driver who was driving without a CDL and had a history of several prior crashes.


Even though the driver whose truck collided with the teenager’s car was on his 25th hour of driving, couldn’t read English, had cruise control set to 70MPH, and didn’t brake until one second before the crash, the bulk of the verdict was for punitive damages against the truck driver that caused the traffic backup.


As the frequency and size of nuclear verdicts increase, excess insurance carriers have fled the market, making excess insurance coverage both unaffordable and unavailable for many trucking companies.  This has forced even the largest trucking companies to reduce the amount of insurance coverage they carry, leaving them exposed and unprotected against a nuclear verdict.  Most trucking companies, if faced with a judgment that is millions (or tens of millions) of dollars in excess of their insurance coverage, would have to go out of business because they wouldn’t be able to pay it.


Strategies for Dealing with Nuclear Verdicts


So what can be done about it?  As stated in a Caseglide blog entitled, “What is a nuclear verdict?,” better communication and collaborative dialogue between both the defense counsel and claims teams can help mitigate the risk of a nuclear verdict. When a claims leader is informed late in the game that they could, and should, have settled and now they are headed to court, the results can be catastrophic.


Along this same line of reasoning, I think Kiara Taylor hit the nail on the head when she wrote:

“Pre-trial settlement is the easiest way to avoid a nuclear verdict.”


Cottingham & Butler, with its dedicated team of Claims Advocates, can help with implementing both the mitigation and the avoidance strategies by encouraging and facilitating better communication and collaborative dialogue between the insured, the claims team, and defense counsel, and by encouraging pre-trial settlement all along the way.

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