Escalating Costs in Trucking Litigation: Navigating the Crisis

Thang Truong
Thang Truong
Updated on:

The American trucking industry, a crucial cog in the nation’s economy, is currently navigating treacherous waters. Over the past decade, the landscape of trucking litigation has seen a tumultuous shift, with settlement amounts and jury awards skyrocketing to unprecedented levels. This alarming trend, intensified by evolving legal tactics and the ripple effects on insurance, threatens the very backbone of an industry predominantly comprised of small businesses. Delving into this crisis, we explore the intricate details of this surge and the potential measures to rein in the escalating costs.

The Rise of Trucking Lawsuits

The US trucking industry grapples with an escalating litigation environment. Jury awards and settlements relating to trucking lawsuits have seen unprecedented growth in the past decade. A study by the US Chamber Institute for Legal Reform (ILR) urges a collective approach involving multiple stakeholders to address the increasing litigation threats in the sector. As Nathan Morris, senior VP at ILR, highlighted, the number and cost of claims are consistently increasing, indicating an unsettling trend in trucking litigation.

Statistical Overview: The Monetary Impact

Between 2010 and 2018, verdicts against trucking firms escalated by a staggering 867%. From June 2020 to April 2023, the average lawsuit award amounted to $27.5 million, with settlements averaging $10 million. Notably, around 96% of trucking carriers in the US operate 10 or fewer trucks. Such small businesses stand at significant risk from the financial burdens of litigation.

Nuclear Verdicts and the Domino Effect

Nearly 22.8% of personal injury and wrongful death cases with awards surpassing $10 million between 2010 and 2019 stemmed from auto accidents. Alarmingly, one-fourth of these involved a trucking firm. The number of cases exceeding $1 million surged by 235% between 2012-2019 in comparison to 2005-2011. The states posing the highest litigation risks included Florida, California, Pennsylvania, New Jersey, Texas, and Georgia.

Litigation Tactics Amplifying Verdict Amounts

Several strategies adopted in courts have resulted in higher verdicts for plaintiffs. These include:

  • Medical referral networks and inflated billing.
  • “Reptile” courtroom strategies.
  • Targeting a broader range of defendants.
  • Ambiguities in the standard of care for trucking operations.

The “reptile theory,” a method instilling fear in jurors, and aggressive changes in litigation patterns have significantly impacted the size and number of verdicts.

The Insurance Industry’s Role

The inflation in verdicts and settlements adversely affects the insurance market. It leads to spiked trucking liability insurance rates and a reduced availability of coverage options. Insurers, being at the forefront, possess the capability to modify the trajectory of these cases. By actively seeking information about lawsuit financing and being vigilant about “reptile” strategies, insurance companies can potentially mitigate the surge in litigation costs.

The Ripple Effect: How Trucking Litigation Impacts Commercial Insurance Costs

In an economy that heavily relies on the trucking industry, skyrocketing litigation costs can have a domino effect, most notably on commercial truck insurance premiums. As litigation settlements and jury awards increase, insurance companies find themselves bearing a larger financial burden. This invariably leads to an uptick in premium costs for trucking firms.

Firstly, commercial truck insurance companies, to maintain their profitability, need to balance their risk exposure with the premiums they collect. When the risk is perceived as higher due to increasing litigation costs, premiums inevitably rise. For small trucking businesses, which make up a significant portion of the industry, this added cost can be burdensome, leading some to opt for lower coverage limits or, in more extreme cases, forego insurance altogether.

Moreover, insurance providers may grow more selective in underwriting policies, leading to stricter qualification criteria for trucking firms. This restrictiveness can exclude certain businesses from obtaining insurance, particularly those with any history of incidents.

Additionally, as claims become more expensive to settle, insurers may be more reluctant to settle out of court. This could prolong litigation, incurring more legal fees and causing further financial strain on all parties involved.

Lastly, the decreased profitability in providing trucking insurance due to increased claim costs may drive some insurers out of the market entirely. Reduced competition usually results in higher prices for consumers, further exacerbating the issue.In essence, the surge in litigation costs doesn’t just impact the immediate parties involved in lawsuits. Its ripple effects can be felt industry-wide, with commercial truck insurance costs becoming a significant concern for countless businesses.

Closing Remarks

The alarming rise in trucking litigation costs signifies an urgent need for reforms. Stakeholders must collaborate to ensure a sustainable, fair, and balanced legal landscape, which not only protects carriers but also benefits consumers. The role of insurers, in particular, can be pivotal in steering this change.

Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at realtor.com, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

More Stories

Best 9 Box Truck Business Ideas for 2024

The entrepreneurial spirit thrives on innovation, finding niche markets, and capitalizing on trends. For those with a sense of adventure and a box truck at their disposal, a world of business opportunities await. Box trucks, given their spacious interiors and versatility, serve as ideal platforms for numerous ventures. Here, we delve into the best 9 […]

Top 9 Grants for Trucking Businesses in 2023

Trucking continues to be a robust sector, weathering global challenges like the COVID-19 pandemic. The surge in demand for goods transportation, fueled by businesses and individuals, puts trucking companies in a key position for growth. If you’ve considered launching a trucking business, there are trucking grants available that can help kickstart your venture. Understanding Trucking […]

Milepost Joins Truckstop: A New Dawn for Commercial Truck Insurance

The trucking industry is about to witness a significant shift in how insurance policies are procured, managed, and serviced. Milepost Insurance Agency LLC, a renowned Berkshire Hathaway enterprise, has recently collaborated with Truckstop, thereby pioneering a new era in trucking insurance for independent owner-operators. Revolutionizing the Insurance Experience The primary aim behind this dynamic partnership […]

The Nuances of Fleet Insurance Policies in Employment Contracts

Truck fleet insurance policies offer comprehensive coverage to designated groups such as employees. However, challenges surface when an employee’s eligibility for this coverage changes mid-employment. A recent case in the Canadian Industrial Relations Board, Lewis v. Whiteline Trucking, delves into the intricacies surrounding this situation and sets a precedent for employers and their contractual obligations. […]

Trucking Industry Facing Increased Claims Amid Economic Strains

The trucking industry is grappling with a rise in fire and theft claims amidst economic strains, higher insurance costs, fuel prices, and driver shortages. This unsettling trend, reminiscent of past recessions, raises concerns over fraud and foul play, as well as the challenges in risk mitigation and claim adjustments. The insights of Stacy Bradshaw, the […]

A Cross-State Battle: How California’s Emissions Standards Impact Pennsylvania’s Trucking Industry

The story of Brian Wanner and his family-run trucking company, Peters Brothers, Inc., reveals a complex struggle between state regulations, business interests, and environmental considerations. Located in Pennsylvania, Peters Brothers is facing challenges from California’s stringent emissions regulations due to a decades-old rule that required Pennsylvania to comply with California’s standards. Here’s how this legislation […]

Regulatory Changes and Rising Commercial Truck Insurance Costs in California

In the wake of the passing of California’s AB5 bill, the trucking industry, including drivers and insurers, face unforeseen challenges. The legislation threatens to severely disrupt contractual trucking gigs, leading to rising insurance costs and potential operational changes. AB5 – A Potential Setback for Owner-Operators AB5, signed into law by Governor Gavin Newsom in 2019, […]

Navigating the Freight Recession: The Impact on Trucking Insurance

The trucking industry has faced a rollercoaster ride, booming during the early stages of the COVID-19 pandemic and then entering a downturn that some believe has evolved into a freight recession. This fluctuation has presented numerous challenges for carriers and has also left its mark on the insurance industry. This article explores the insights from […]

Navigating the Complexity of Insurance Coverage in Florida Truck Accident Cases

Understanding the nuances of insurance coverage is an integral component of personal injury cases, more so in truck accident lawsuits. In these cases, the complexity can intensify due to multiple stakeholders, including various insurance carriers. As Florida operates under a “no-fault” insurance system, comprehending its implications, the role of insurance companies, and how to navigate […]