If it seems like you’re reading about larger jury awards in civil litigation cases, you’re not imagining it. Recent research shows that nuclear verdicts, jury awards of $10 million or more, have increased sharply in both frequency and severity. According to Insurance Journal, in 2023, there were 89 nuclear verdicts totaling $14.5 billion, a 15-year high, with the median award rising to $44 million, more than double the median seen just a few years earlier. The trend accelerated further in 2024, when the number of verdicts exceeding $10 million jumped 52% year over year to 135 cases, and total jury awards surged to $31.3 billion. Even more striking, verdicts exceeding $100 million nearly doubled, and five cases surpassed the $1 billion mark, underscoring how outsized jury awards have become a defining feature of today’s litigation environment.
This dramatic and quick uptick in jury awards led experts to coin the term nuclear verdict. This is when a jury provides an award in a case that’s more than $10 million, an amount so high that it surpasses what most people would consider reasonable. So, what’s causing this phenomenon? Nuclear verdicts are closely tied to another trend: social inflation.
Social inflation is a term that describes the rising cost of insurance claims as a result of societal trends, such as increased litigation, plaintiff-friendly legal decisions, broader contract interpretation, and larger jury awards. Public mistrust in large corporations, third-party litigation funding, the erosion of tort reform, and desensitization to large jury awards are the main factors driving social inflation in the United States today.
Social inflation has ushered in the era of nuclear verdicts, and this trend has persisted in recent years. Nuclear verdicts and social inflation feed into each other and create an unsustainable cycle of increased and frequent damage awards that negatively impact both consumers and the insurance industry as a whole, leading to rate increases. Fortunately, there are coverage options that can help protect you from this phenomenon.
Expand your protective layers
Insurance coverage is a vital component to helping protect your assets and financial future, but even if you are covered, how much coverage should you get for greater losses?
Consider this: if you’re at fault in a car accident and the other person gets hurt, or you have a guest in your home that suffers an injury, they might decide to pursue damages that can impact your assets and future earnings.
If you’re sued, found at fault, and the settlement exceeds your policy limits, you’re responsible for paying the difference. Your future earnings, home, retirement funds, college funds, and other assets could be on the line to make up for the difference.
Excess liability and personal umbrella coverage are two types of policies that can provide additional insurance protection on top of your existing policies for these kinds of situations. While each is similar, there are distinct differences.
What is personal excess liability?
When the coverage limits for your underlying home or auto insurance policies are not enough to cover an incident or lawsuit, an excess liability policy provides additional limits to help cover the difference between your current policy limits and the amount of a potential claim filed from an incident or lawsuit. It’s usually sold in increments of $1 million and typically covers liability issues where you might be sued for negligence.
Here’s a sample scenario:
You are in a car accident, and the other driver sustains severe injuries. The driver alleges that you were at fault for the accident, and a claim is settled for $250,000. If your auto insurance policy limit is $50,000, you would be personally responsible for the remaining $200,000 – unless you have an excess liability policy, which would kick in to cover that remaining amount.
What is a personal umbrella policy?
A personal umbrella policy also provides additional protection, not only monetarily, but in the form of broader coverage outside the initial scope of what the policies will cover. For example, if you are sued for defamation of character and slander and found guilty, the type of liability coverage needed sits outside the scope of a typical homeowners policy – this is where personal umbrella insurance kicks in to provide that broader coverage needed.
With many homeowners and drivers targeted in lawsuits more often today than ever before, personal umbrella insurance can help protect you from being hit with court costs and potential multi-million-dollar judgments that would otherwise be taken out of your assets.
Here’s a sample scenario:
You host a large gathering in your home where alcohol is served. A guest leaves, gets into a car accident, and is severely injured. The accident was attributed to the consumption of alcohol at the house where the guest had just been, and the homeowner was found at fault. Medical expenses total $750,000. Your homeowners policy covers $500,000, leaving $250,000 in remaining damages outside the scope of that policy. If you have an umbrella policy, those remaining damages outside the scope of your homeowners policy would be covered under it.
Real scenarios, real stakes
To further illustrate the value of these coverages, let’s look at a few real incidents that have happened to help you understand how these coverages might be valuable:
While taking items to his trash, a man was attacked by a neighbor’s three dogs, which had escaped through an open gate on the neighbor’s property. The man sustained multiple lacerations to both legs and a lower back injury.
After completing his work in the customer’s attic, a heating and cooling service technician fell through the floor of the attic, falling nearly 20 feet. He sustained injuries to his back, hand, foot, ribs, shoulder, and wrist
While traversing a crosswalk, a woman was struck by an oncoming vehicle. The impact resulted in a traumatic brain injury and damage to one leg that ultimately necessitated an above-the-knee amputation.
Do you need excess liability coverage?
If you check yes to even one of these boxes, you should have excess liability coverage
Know your risks
Working with your insurance advisor to review your current assets and how they might be at risk in liability scenarios will help you determine the best path toward protection. Your advisor will also want to know:
Do you own/lease:
- A home
- An automobile
- A pet, such as a dog
- A pool or trampoline
- A handgun or rifle
- A large investment portfolio or sizeable assets
- Multiple properties, such as being a landlord
Do you:
- Coach kids’ sports
- Serve on the board of directors for a nonprofit organization
- Host parties or events in your home or at your propert
How much coverage do you need?
So, how much umbrella coverage should you purchase? The answer really depends on your unique circumstances. This is a highly personal decision, but as a baseline, think about your assets and earning power. The more you have, the greater your potential losses, and the more protection you’ll need.
We also recommend looking into excess uninsured motorist (UM) coverage. Excess UM coverage is an endorsement that you can add onto your umbrella policy to cover your personal medical bills in the event that you get into an accident with an uninsured or underinsured motorist, and your medical expenses exceed their car insurance policy limits. Because medical expenses can quickly add up, excess UM has grown in popularity in recent years.
Your next steps
Consult with The Baldwin Group’s private risk team to review the liability coverage details and terms in your existing homeowners and auto insurance policies, review any changes in your lifestyle or assets, and determine whether an umbrella policy, excess liability policy, or both make the most sense to help protect your now and your future. Let’s do an assessment of your lifestyle and get insights into what coverage is appropriate for your personal circumstances.
This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The content of this document is made available on an “as is” basis, without warranty of any kind. The Baldwin Insurance Group Holdings, LLC (“The Baldwin Group”), its affiliates, and subsidiaries do not guarantee that this information is, or can be relied on for, compliance with any law or regulation, assurance against preventable losses, or freedom from legal liability. This publication is not intended to be legal, underwriting, or any other type of professional advice. The Baldwin Group does not guarantee any particular outcome and makes no commitment to update any information herein or remove any items that are no longer accurate or complete. Furthermore, The Baldwin Group does not assume any liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Persons requiring advice should always consult an independent adviser.
