The Wall Street Journal editorial board stated in a June 9 opinion that plaintiff attorneys are suing insurance providers for outsized damages, resulting in higher car insurance costs for policyholders.
"Litigation abuse is also growing as plaintiff firms sue insurers for inflated damages," said the editorial board. "This is one reason, in addition to rising medical costs, that the average bodily injury claim has increased by some 80% since 2014. Excessive litigation accounted for about $4 billion in commercial auto insurance claim costs in 2021."
Nationwide, the cost of car insurance has increased by 46.2% since January 2020, according to the Wall Street Journal. Lawmakers such as Sen. Elizabeth Warren have said that climate change and corporate greed are causing rising insurance costs, but the "actual culprit" is a combination of inflation and lawsuit abuse. These factors are leading to rising insurance costs and pushing some insurers out of markets, leaving residents with fewer options.
According to a report from Moneygeek, the average cost of car insurance in New Jersey ranges from $1,492 for a forty-year-old driver to $1,677 for a 25-year-old driver, making insurance coverage in the Garden State expensive compared to other states. Drivers with infractions pay even more: drivers between the ages of 22 and 29 with a ticket pay an average of $1,869 annually, while drivers in that age range with an at-fault accident on their record pay an average of $2,549.
Plaintiff attorneys use tactics such as "anchoring" and the "reptile theory" to secure nuclear verdicts, or verdicts larger than $10 million, according to a report from Marathon Strategies. Anchoring is when an attorney suggests an exorbitant monetary amount that then becomes "anchored" in jurors’ minds as a reference point, while the reptile theory involves attorneys appealing to jurors’ emotions to win large verdicts. New Jersey saw $1,480,387,446 in nuclear verdicts between 2009 and 2023.
According to the Insurance Journal, nuclear verdicts put a strain on the availability and affordability of insurance coverage. As the size of jury awards increases, especially in cases involving trucking, pharmaceuticals, and product liability, insurers find it more challenging to underwrite these risks without raising premiums or reducing coverage limits.
