While lawmakers weigh raising the mandated insurance coverage minimum for the trucking industry, new data shows that cases with so-called nuclear verdicts have increased dramatically throughout recent years.
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Nuclear verdicts refer to large jury awards, sometimes in excess of $10 million. And in the trucking industry both the frequency, and size, of large verdicts have been on the rise.
While in 2006 there were only four cases with awards in excess of $1 million, in 2013 there were more than 70, according to the American Transportation Research Institute. There was a 235 percent increase in cases with verdict sizes of at least $1 million between 2005 to 2011 and 2012 to 2019.
From 2017 to 2018 alone, the average size of verdicts grew by 483 percent.
“Lawsuits have expanded at a nearly exponential pace,” researchers wrote.
The first personal injury lawsuit occurred in 1932.
Between 1990 and 1994 the median dollar result from cases won was $190,000 – a 90 percent increase when compared with 1985 to 1989.
One of the largest awards, according to ATRI, was granted in 2016 after a driver fell asleep at the wheel, crossed over the highway median and caused a crash that killed five people. The driver and the motor carrier were ordered to pay $280 million.
ATRI identified certain factors that correlated with larger verdict sizes, including whether children were involved in a crash. Spinal injuries were also more impactful when it came to determining the size of the award.
John Kearney, president and CEO of Advanced Training Systems, previously told FOX Business the litigation environment has changed because lawyers have begun to go after companies – rather than individual drivers – for their training, retraining or maintenance training policies.
“If you have an accident and the opposing law firm questions where you train, there seems to now be an assumption that if you have an accident you must not have been trained adequately,” Kearney said. “That assumption means you lose a lawsuit.”
Meanwhile, increasing insurance costs have become a problem for small carriers, which can’t afford to pay up.
“The existence and impact of nuclear verdicts on the trucking industry is clear and expansive,” the ATRI report stated. “All entities in the supply chain – far beyond those involved in a crash, are experiencing the negative financial consequences from verdicts and awards that dramatically exceed compensatory costs.”
Multiple trucking company executives have cited insurance costs as a headwind – and some have even said rising rates would hurt small truck owners moving forward.
USA Truck CEO James Reed called the insurance market “brutally tough” in October, saying the company would experience between $750,000 and $1 million of incremental premiums per quarter beginning in the fourth quarter.
As previously reported by FOX Business, lawmakers are considering raising the Federal Motor Carrier Safety Administration-required minimum coverage to $2 million, from $750,000.