Nuclear verdicts can have a significant impact on insurance companies and their clients, particularly in the following industries: commercial auto, product liability, directors and officers, medical malpractice, and professional liability. In some cases, the damages awarded can exceed the limits of the insurance policy, leaving the insured to cover the remainder of the damages out of pocket. Nuclear verdicts can have a significant impact on insurance companies and their clients, particularly in the following industries: commercial auto, product liability, directors and officers, medical malpractice, and professional liability. In some cases, the damages awarded can exceed the limits of the insurance policy, leaving the insured to cover the remainder of the damages out of pocket. Photo: moodboard/Adobe Stock

The insurance industry is no stranger to high-stakes claims. However, over the past several years, there has been a growing trend of what is known as “nuclear verdicts,” or exceptionally high jury awards that surpass what should be a reasonable or rational amount. Nuclear verdicts can have a devastating impact on insurance companies and their clients, and it’s critical for insurance claims executives to understand how to manage them.

Nuclear verdicts are a relatively new phenomenon in the insurance industry. While litigants have always faced the possibility of large verdicts in high-stakes litigation, the risk of nuclear verdicts has risen significantly. In fact, a long-term study of nuclear verdicts from 2010-2019 found that the median nuclear verdict increased by 27.5% over the ten-year study period. Interestingly, six states (California, Florida, New York, Texas, Pennsylvania, and Illinois) are responsible for 63% of nuclear verdicts, far greater than their share of the total US population. The term “nuclear verdict” refers to any court award or settlement that is higher than expected, but legal experts officially define a “nuclear verdict” as one that exceeds $10 million. These verdicts often include disproportionally large non-economic damages awards, but the real hallmark of nuclear verdicts is juror anger.


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