Nuclear Fallout: Defending Small Businesses Against Nuclear Verdicts

By Pathpoint


Nuclear verdicts, the latest buzzword in the insurance world, are not to be taken lightly. These hefty legal judgments usually exceeding $10 million, are causing significant disruptions, especially in small business cases. The situation is dire, with a storm brewing for small business owners, threatening to upend their financial stability and operations. The big question is, how did we end up in this crisis, and what can you do about it? Let's delve into this urgent matter.

Uncapped Awards

  • Open policy limits in insurance mean that there is no specific maximum amount that an insurance company will pay for a claim, allowing for potentially larger payouts based on the circumstances.

First, why do these nuclear verdicts appear so frequently? We're not here to place blame, but if we had to look somewhere, we would start with the courts. Local jurisdictions have been reducing damage caps on jury awards. What are damage caps? Insurance cases typically cap general damages to set precedence and stabilize the payouts. However, times are changing, making it rain dollar bills for the plaintiffs with legislative shifts, judicial interpretations, and a sprinkle of advocacy for higher awards in specific cases.

Savvy Legal Eagles

  • The "reptile" theory in law involves plaintiff attorneys using persuasive tactics to appeal to the primal instincts of jurors, triggering fear and anger to secure favorable verdicts.

With uncapped damages, who would take advantage of that? You don't need a Harvard degree to figure that out. Plaintiff attorneys have been brushing up on their aggressive strategies, using "reptile theory" to trigger anger and fear and secure those hefty punitive verdicts. They're also using persuasive tactics to "open up" policy limits, arguing that insurance companies unreasonably rejected victims or did not respond promptly to indemnify the plaintiff, leading to larger payouts as carriers breach their duty of care. These legal eagles are also getting financial support from third-party litigation funding, a $14 billion dollar industry that is continuing to grow and profit off of this litigious environment. (Research Nester, 2024). Providing resources and financial backing to high-profile cases, these funders are now looking at smaller cases to continue driving investment growth in their portfolios. These lawyers, armed with their third-party financers, are truly masters of strategy, incredibly shrewd, and the stuff of nightmares for insurers.

The Economy

In all fairness, the judicial system has its reasoning for bursting open the financial fire hydrants. The cost of everything—from labor to materials—is flying through the roof, thanks to good ole’ inflation. If you're spending extra for a carton of eggs or your gas, you can be sure the price of building materials, business equipment, and labor is also increasing. One sector impacted the most- the real estate market. The insurance industry reports that rebuilding and replacement costs surged an astounding 55% between 2019 and 2023, making life even more challenging for property owners. (Meyersohn, 2024)

Social Inflation

  • Social inflation refers to the increasing impact of societal trends and influences, such as attitudes toward litigation, on the frequency and severity of insurance claims and payouts.

Lastly, let's not forget the impact of social media and social justice movements. The public tends to have sympathy for underdogs. Plaintiffs are the Davids to any corporation’s Goliath; this leads to juries awarding more significant sums to plaintiffs, especially when the defendant is a big bad wolf of a corporation with deep pockets—cough, cough, insurance companies.

How Can Insurance Agents Protect Their Clients?

With all this drama playing out in the courts, economy, and online, small business owners are the ones left paying the piper. As nuclear verdicts continue, insurers are charging higher premiums with higher deductibles and are becoming more unwilling to write certain classes of business. The real estate market has been significantly impacted, as certain classes, like apartments, dwellings, and lessor's risk, are becoming harder to find adequate coverage. So, what's an insurance agent to do?

Insurance agents should focus on highlighting the importance of obtaining the highest liability limits for their clients, which includes excess general liability coverage. This additional layer of protection could serve as a shield for small business owners, helping them mitigate the potentially devastating impact of large legal judgments. The key is to educate your clients, make sure they comprehend the implications of these significant judgments, and ensure that they are well-protected by sufficient coverage. Fortunately, there's one place you can go for your underlying and excess coverage- Pathpoint!

Pathpoint for Small Properties

Pathpoint provides agents with the superpower to quickly mix-and-match general liability up to $1M/$2M limits, and property quotes up to $3.3M TIV per location/$5.6 M per policy in a matter of minutes- with one submission. In addition to offering robust coverage on your property accounts, insurance agents can now add excess to a variety of lessor's risk classes for residential and commercial tenants with one click. Add up to $5M in excess, faster than it takes to brew your cup of coffee. With end-to-end e-signable binding and PathPay Insured direct bill options, finding comprehensive coverage during this nuclear fallout has never been simpler. And if there is a claim, you can rest assured that your clients are covered by A.M. Best A-rated carriers, who have dedicated and trained professionals to handle claims with competence and care.

By providing small business owners with the appropriate primary and excess coverages, insurance agents can help them confront the risks of nuclear verdicts and avoid significant financial losses. In this courtroom battle, the agents are the unsung heroes, working to protect small businesses from the potential fallout.

Protect your clients from nuclear verdicts by adding excess.


  1. Fliegelman, A. (2023, December 14). Wind, Fire, Water, Hail: What Is Going on In the Property Insurance Market and Why Does It Matter? OFR. view website
  2. Insurance Research Council (2020, June 1). Social Inflation: Evidence and Impact on Property-Casualty Insurance. The Institutes. view website
  3. Lyden, T. (2023, July 21). What are nuclear verdicts and why are they occurring? PropertyCasualty360. view website
  4. Meyersohn, N., & Bahney, A. (2024, April 26). The home insurance market is crumbling. These owners are paying the price. CNN Business. view website
  5. The Institutes (2024, June 11). Nuclear Verdicts Surge With Median Award Near $24M in 2023. Risk & Insurance. view website
  6. (2023, August 1). Inflation and Impact on Property Insurance. H&A Inc. view website
  7. (n.d.). What's Driving Huge Jury Awards? Navigating Legal Liability in the Era of the Nuclear Verdict. Travelers. view website