Motor Vehicle Litigation Added Billions to Insurance Costs

Why it matters

The rise in litigation activity, coupled with increased claim severity and award amounts, has outpaced the frequency of underlying insurance claims. This shift has placed significant upward pressure on the overall costs of auto liability coverage.

The details

Researchers determined that 50.6% of the U.S. population resides in the 11 states where complete tort filing and disposition data is available, allowing for state-level projections. These figures reflect an estimated $1.07 billion in excess litigation value in federal cases and $42.77 billion in state courts.

Timeline

1. From 1995 to 2004, the average plaintiff judgment award was $377,000.

2. Between 1995 and 2008, tort filings declined at an annualized rate of 2.8%.

3. Between 2014 and 2024, tort filings rose at a 5% compound annual rate.

4. From 2015 through 2024, litigation added $43.84 billion to insurance costs.

5. In 2024, federal motor vehicle tort filings reached 6,809.

Roadmap

The automotive insurance industry is currently contending with a reversal of long-term filing trends that previously saw a decline in litigation activity. This escalation marks a departure from the period between 1995 and 2008, when tort filings consistently trended downward.

The takeaway

Drivers should be aware that insurance costs are influenced by broader legal trends and the frequency of tort filings across the nation. Understanding these shifts can help policyholders navigate the changing landscape of auto liability coverage and premium adjustments.

Further reading

For more information on market trends, visit the United States sub-category page.