By: Rodney Nubin

Liability awards have skyrocketed in the commercial auto and trucking segment. A report from the American Transportation Research Institute reveals that the average jury verdict increased 967% between 2010 and 2018, from $2,305,736 in 2010 to $22,288,000 in 2018.

There have been many examples of “nuclear verdicts” – jury awards of at least $10 million – against the commercial auto and trucking industry. In one recent example, a jury awarded a family $90 million in a lawsuit against Werner Enterprises after the driver of a pickup truck lost control of the vehicle, crossed the median, and collided with a Werner tractor-trailer, killing a seven-year-old passenger and injuring three others. CNBC says that this case is being appealed.

The Werner case is interesting because of the details of the crash, but it is not the largest verdict seen in recent years. According to FreightWaves, that dubious honor may go to Top Auto Express Trucking Company, a Florida-based company that was hit with a $411,726,608 verdict after its involvement in a 45-vehicle pile up that resulted in injuries to a motorcyclist, the plaintiff in this case.

The Impact of Nuclear Verdicts on Carriers and Policyholders

The rise of nuclear verdicts has made carriers reluctant to offer high limits. Excess coverage has become difficult to obtain, and when it is available, it tends to be very expensive. Accounts with large fleets – and therefore a high risk of one of the vehicles being involved in a crash that leads to a nuclear verdict – are especially difficult to insure right now. 

At the same time, the rise of nuclear verdicts means that it is increasingly important for fleet owners to secure robust coverage with high limits. If a jury verdict exceeds the policy limit, the policyholder could be on the hook for the difference – and some fleets might not survive. According to Transport Topics, an Arkansas-based motor carrier was recently forced to close after a multimillion-dollar jury award. 

Advice for Brokers

In the current market, policyholders should expect to face rate increases and possibly even coverage denials. Communicate with your clients well ahead of their renewals so they’re not caught off guard.

Finding the right coverage may require exploration and negotiation. For example, we recently had an account for a large food manufacturer with a large, nationwide fleet. They bought a $25 million limit for their excess policy last year, but they couldn’t get it renewed this year. As a solution, we negotiated with the underlying auto liability carrier to increase the primary auto liability limit from $1 million last year to $2 million this year. A higher underlying auto liability coverage limit made it easier to buy excess coverage.

As you prepare your clients for renewals, here are some tips to share:

• Buy the highest limit you can afford.
• Budget accordingly. The $100,000 that you spent last year won’t get you as much coverage – spend it and more if you can.
• Consider breaking apart policies to isolate riskier exposures. Put less risky exposures on a separate policy. This way, you’ll get higher limits for less on some exposures even if you can’t get high limits for everything.
• See if you can increase limits on your primary layer to make it easier to get excess coverage.
• Put a heavy focus on preventative measures to avoid and control liability claims: dashcams, telematics, well-documented training, accident investigation and meetings.
• A good loss history makes it easier to get coverage. Watch your claims and monitor your reserves to ensure your loss history is as accurate as it can be.

If you run into challenging issues with your clients, be sure to enlist our help.

Rodney T. Nubin 

Senior Vice President and Casualty Practice Leader 

email: rnubin@sociusinsurance.com 

direct: (847) 551-5139

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