Over the past decade, the proliferation of nuclear verdicts in trucking has accelerated. According to a study by the American Transportation Research Institute (ATRI), verdict awards in the trucking industry have significantly increased over the past few years, with most exceeding the $1 million mark.

Simply put, a nuclear verdict is an exceptionally high jury award that far exceeds what would be considered a reasonable settlement. Nuclear verdicts typically occur when a jury determines that the defendant is willfully or purposely denying any responsibility for or involvement in an accident. Some describe a nuclear verdict as a settlement that exceeds $10 million, while others define it as being much higher.[1]

Why the increase in high jury awards?

A primary catalyst behind the substantial increase in nuclear verdict settlements has to do with the high cost of medical care plaintiffs are seeking. Other reasons include the highly publicized nature of major trucking accidents, as well as the fact that lawyers are moving away from blaming the individual drivers and redirecting the blame at a “lack of systemic corporate oversight and adequate safety procedures and regulations.”[2]

“[Unfortunately,] there is also the now widely accepted societal expectation implicit in nuclear verdicts that [these] verdicts should sustain plaintiffs and their dependents for the remainder of their lives, in addition to providing monetary compensation for suffering.” — Source: Freight Waves

The impact on insurance rates and coverage

In an article by The Wall Street Journal and reported on Freight Wavesthere was a 300% increase in the frequency of $20 million-plus verdicts in 2019 from the annual average in 2001 to 2009. The report goes on to note that in the past five years there have been five times as many $20 million-plus verdicts compared with what was reported from 2010 to 2014.

Due to the high-risk exposures inherent to the industry, trucking and transportation companies typically rely on layers of insurance coverage – often from multiple insurance providers. However, in response to the increase in exceedingly high jury awards, many insurance companies are not only adjusting rates, but significantly decreasing limits to help reduce their overall loss exposure.[3] As a result, companies could find themselves scrambling to secure the coverage they need to mitigate risks, which could mean having to move away from an admitted market and into excess and surplus lines.

“In response to changing conditions, businesses may now need to include several additional layers in order to obtain enough insurance coverage to protect themselves.” Source: Mehaffy Weber.

Increase in smaller awards also impacting insurance rates

In addition to nuclear verdicts, there has a steady increase in smaller awards, just under the $1 million mark, that are also impacting the trucking industry. The ATRI study shows that although less than $1 million, these verdicts and settlements are having a significant financial impact on smaller trucking operations and leading to an average 20%-25% increase in commercial insurance rates.

Examples of average settlement amounts for these somewhat smaller infractions include:

  • Poor driver history: $680,733
  • Phone use: $629,375
  • Hours of service violation: $584,531
  • Inadequate training: $388,464
  • Poor driver hiring practices: $341,205

Conclusion

In 2020, there were there were 4,444 truck-involved fatal crashes and 101,000 others that involved injuries, according to data by the Federal Motor Carrier Safety Administration. In 2021, the National Highway Traffic Safety Administration reported that fatalities in crashes involving at least one large truck were up 13% compared to 2020.

It’s hard to say just how many of these crashes resulted in a nuclear verdict. However, the fact remains that it is impossible to eliminate large payouts completely in trucking injury-related accidents. These mega verdicts should be a catalyst for companies to be proactive in managing their own risks and to mitigate exposures with sufficient insurance.

“[Now, more than ever before], is paramount that carriers, brokers and shippers have the proper procedures and training in place that will help protect them to the greatest degree possible.” — Source: Freight Waves

About Transatlantic Underwriters

Transatlantic Underwriters (TAU) is an innovative transportation wholesaler specializing in the placement of commercial auto liability, auto physical damage and motor truck cargo coverage. For questions or to learn more about our products and services, please contact Colby Waltenburg at cwaltenburg@tau-usa.com.

[1] Case Glide.

[2] Freight Waves.

[3] Mehaffy Weber.

TAU TALKS TRANSPORTATION

Subscribe to our LinkedIn Newsletter,
“TAU Talks Transportation”, so you never miss an update!
SUBSCRIBE NOW

GET IN TOUCH WITH US

(800) 297-5536

MARIETTA, GA

319 Atlanta Street SE Unit 220
Marietta, GA 30060
(770) 977-5610

STOCKTON, CA

3558 Deer Park Drive Suite 106
Stockton CA, 95219
(209) 279-1072
© Copyright 2023 | Transatlantic Underwriters | All Rights Reserved
Privacy Policy & Cookie Policy
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram