Trucking, transportation companies, and other businesses that own transportation fleets have been on the receiving end of an increasing number of enormous jury verdicts. These so-called “nuclear verdicts” have put some trucking companies out of business while causing grave financial harm to others. Massive jury verdicts should prompt companies to act now, both to manage their own risk and to purchase sufficient insurance to cover themselves in the event of a severe accident.
“Nuclear Verdicts” Are on the Rise in the Last Decade
The number of auto accident settlements and verdicts that top $15 million has more than doubled in the past decade. Not all of this increase has come from economic inflation; there is a different kind of inflation that has caused auto accident verdicts to spike. Even if the actual costs related to transportation accidents have not dramatically risen, attorneys refer to “social inflation” as a prime factor in larger verdicts. Not only do plaintiffs’ attorneys condition accident victims to expect larger settlements, but litigants themselves have less aversion to large lawsuits. The growth of the litigation financing industry has also made it easier for plaintiffs to go the distance with large companies in court cases. Finally, the jury pool often consists of people who have been conditioned by the media to distrust corporations and want to punish them.
This trend is not only here to stay, but it will accelerate over time. There are more trucks on the road, and juries are becoming more strident. With that in mind, any company that owns transportation fleets needs to adjust to the current and future reality by taking steps to protect itself. Once an accident happens, it is too late to take protective measures. At that point, a company may find itself at the mercy of an angry jury.
Risk Management Can Lower the Chances of a Large Jury Verdict
One of the major reasons why juries feel the need to assess large verdicts against companies is to send them a message. A jury may believe corporate America has a culture of non-compliance with the law that it wants to punish. With that in mind, companies should conduct their own audits of operations to ensure that there are no compliance gaps that could cause them headaches if there is an accident – our Texas transportation attorneys can help businesses assess their own risk exposure as well. Although there is no predicting what a jury can or will do, many of the steps to avoiding a large verdict are a function of risk management.
Trucking and other transportation companies should consider engaging a third party to do a comprehensive evaluation of their safety practices. They should also entertain investing in technology to monitor drivers’ performance on the job, as well as in driver training.
In addition, companies can reduce the risk of large verdicts by instituting policies and ensuring they are followed. For example, trucking and other transportation companies can establish policies to address distracted driving, punishing drivers that have been found to violate protocol. Distracted driving is a major reason for large trucking accident verdicts.
All of these are things that may come into play in an auto accident trial. A plaintiffs’ attorney will take a company-wide look at practices, trying to gain information that portrays a business in a negative light. Although no company is perfect, it may be apparent to a jury when a defendant lacks a culture of compliance. On the flipside, taking some of the above steps can show a jury that a company is serious about safety and that what happened to cause this accident may have been an isolated occurrence (even assuming the truck driver was at fault).
Companies Can Leverage Changes in the Casualty Insurance Market to Their Advantage
Companies can also purchase additional insurance to protect themselves in case they run into a jury that is bent on punishing them. Many businesses, regardless of type, have faced skyrocketing rates for excess liability coverage in light of the trend of large jury verdicts. Higher premiums have also drawn insurance companies back into markets they once left; and, they are now competing for new customers.
However, insurance companies have also made their own adjustments besides raising rates to protect themselves. Many companies have cut the amount of coverage they will offer. Trucking and other transportation companies build towers of coverage that rely upon policies from multiple providers. In response to changing conditions, businesses may now need to include several additional layers in order to obtain enough insurance coverage to protect themselves.
Smaller layers may actually work to the benefit of companies. There are more insurance companies that are able to provide coverage at lower levels, and they may be more aggressive about competing on price. When companies need to obtain larger coverage layers, they may need to pay much higher premiums given the potential liability for the insurance company. Working harder to stack multiple layers is not necessarily a bad thing because it can mean better terms for the policyholder. The market is far from set in stone, and companies can take advantage of the fluidity to engineer creative solutions that provide maximum protection on better terms.
These measures are not just limited to trucking and other transportation companies. Any business that owns a fleet of vehicles may potentially be at risk of massive jury verdicts. Even though trucking and other transportation companies are the kinds of companies most likely to be hit with a nuclear verdict, any company with a vehicle can have a driver involved in a serious accident. The principles of tort law mean the company can be liable for the acts of its employee. Although taking action today requires investment and forethought, it can prevent larger problems in the future.