A $1 billion verdict cannot justify increasing insurance minimums
September 8, 2021
With nuclear verdicts against trucking companies getting out of control, a $1 billion jury verdict seemed inevitable. AJD Business Services and Kahkashan Carrier recently made history by being the first trucking companies to reach that milestone, but does this justify increasing insurance minimums? The answer is a resounding “Absolutely not.”
On Aug. 24, a jury for the Fourth Judicial Circuit Court in Nassau County, Fla., awarded the family of 18-year-old Connor Dzion a $1 billion verdict. Dzion was killed in a crash involving trucks owned by Staten Island, N.Y.-based AJD and Montreal, Quebec-based and Kahkashan.
Although AJD was not involved in the crash that directly killed Dzion, it was slammed with more than $900 million of the $1 billion jury verdict. Some may be quick to use this as a prime example as to why insurance minimums should be dramatically increased. However, that logic is flawed.
Increasing minimum insurance does not increase safety
Nothing, not even a $1 billion verdict, can so much as suggest that increasing insurance minimums will improve safety on the roadways.
Rep. Jesus Chuy Garcia, D-Ill., is trying to increase insurance minimums for the current $750,000 to nearly $5 million, a 556% increase. HR2687 would set that minimum to inflation relating to medical care. Garcia points out that the insurance minimum has not increased since 1980. Set to inflation, $750,000 in 1980 is equal to about $5 million today.
However, Garcia leaves out some very important details when it comes to trucking insurance and lawsuits. To start, most carriers already have $1 million in insurance. Second, a 2014 federal study found that the current minimum insurance level adequately covered damages in all but 0.6% of the cases.
Based on that data alone, the current insurance minimum is more than enough to cover the cost of damages in the vast majority of crashes. Increasing that minimum might help a small handful of cases. But maybe not.
Nuclear verdicts emitting a mushroom cloud over crash lawsuits
Some proponents of HR2687 point to the soaring price tag of jury awards– i.e., nuclear verdicts. As much attention they receive, nuclear verdicts are still the vast exception rather than the rule.
Last June, an American Transportation Research Institute study revealed that eight-figure jury verdicts against trucking companies are skyrocketing. According to the study, jury verdicts of more than $1 million have increased significantly in the past 14 years. Of the 600 cases analyzed, only four with verdicts of more than $1 million were found in 2006. However, 2013 saw a peak of 70 such cases. From 2010 to 2013, the number of seven-figure verdicts went up by about nine times, sustaining that level ever since.
Some will try to use that as convincing evidence in support of HR2687. However, the key stat there is the peak of nuclear verdicts, which was 70 about eight years ago. In other words, HR2687 would help less than 100 cases in a worse-case-scenario year. From 2012 to 2019, only 265 cases resulted in verdicts greater than $1 million. That is hardly justification for a sweeping industrywide regulation.
Nuclear verdicts already account for a miniscule amount of all crash lawsuits, and the soaring price tag of those verdicts puts them out of reach of any reasonable increase in insurance minimums. Even if the minimum goes up to $5 million, it will not do much for these rare nuclear verdicts. If HR2687 wants meaningful change, the insurance minimums will need to be closer to $25 million, which no one will support.
But there’s another flaw in Garcia’s logic.
In many jury verdicts, the big money comes in the form of punitive damages, which we see in the $1 billion verdict.
However, most insurance policies, including AJD’s, do not cover punitive damages. So if you increase insurance minimums to $5 million, and a jury drops a verdict of $1 million in compensatory damages and $4 million in punitive damages, the plaintiffs would only receive the max $1 million in compensatory damages. The trucking company would owe the $4 million, which would put most out of business, making it nearly impossible to collect.
Don’t increase insurance minimums, reduce crashes instead
In a way, HR2687 is somewhat sinister. Rather than reduce the number of truck-involved crashes, trial attorneys would just benefit from the increased payout.
In fact, the identical INSURANCE Act of 2019 was co-sponsored by Rep. Matt Cartwright, D-Pa., who introduced a similar bill in 2013. At that time, Cartwright was a partner in Munley, Munley & Cartwright P.C., a personal injury firm specializing in truck crashes. While he has since resigned, his wife remains a partner in the firm. It would behoove his family’s finances to increase insurance minimums while not reducing the frequency of crashes.
That aside, the real solution is to not have any jury verdicts at all, which is the aim of the popular Road to Zero crash campaign. Taking a look at the $1 billion verdict case, would an increase in insurance minimums have done anything? No.
The reason AJD got hit with $900 million in punitive damages, despite not directly causing the fatal crash, is because the driver should never have been behind the wheel. To start, the AJD driver didn’t even have a CDL. Furthermore, he was involved in a crash on I-95 in the same area just two month prior to the fatal crash. Additionally, the lawsuit states that the driver’s other criminal offenses include:
- Record of duty status log book violation on I-95 in Nassau County (two months before fatal crash).
- Careless driving in CMV causing rear-end crash on I-95 approaching SR 200 in Nassau County (two months before crash).
- Aggressive driving speed, 95mph on a 70 mph zone on I-95 southbound, and following too closely (six months before fatal crash).
- Multiple prior crashes rear-ending vehicles.
- Texting while driving.
- Careless driving (two times).
- Criminal driving with no valid (suspended) license.
- Speeding, 80 mph in a 65 mph zone on I-95.
- Overweight violation on I-95 in Nassau County.
- Speeding (Flagler County).
- Driving with expired registration.
What we need to do is impose stricter driver training requirements and more enforcement regarding bad actors. Let’s make sure the men and women behind the wheel know what they are doing.
Punishing an entire industry for a few bad apples and a couple of overzealous juries solves absolutely nothing. It risks taking owner-operators, among the safest drivers, off the road, thereby decreasing road safety. Essentially, trial lawyers get to pocket a few more bucks with the same or higher crash rates. Who really wins here? LL