It is not just your imagination: verdicts are getting bigger. So-called “nuclear verdicts” have increased in size and frequency over the past decade, particularly after the COVID-19 pandemic. Litigation risk insurance is a little known, but highly effective, option meant to compliment traditional insurance products and provide additional protection for policyholders nervous about litigation exposure.

Unfortunately, it is difficult to predict the exposure presented by any particular case. Between 2020 and 2022, the median verdict increased 95%—from $21.5 million to $41.1 million. In 2022, a jury handed down a verdict worth $7.3 billion for injury to a single plaintiff. Even if an injury or loss is minor, juries have shown that they are willing to penalize corporate defendants with punitive damages that significantly exceed the award of compensatory damages. With such uncertainty and millions (if not billions) at stake, companies can reduce risk with litigation risk insurance.

Three key types of litigation risk insurance include: (1) punitive wrap insurance, (2) adverse judgment insurance, and (3) judgment preservation insurance.

Reprinted courtesy of Latosha M. Ellis, Hunton Andrews Kurth and Charlotte Leszinske, Hunton Andrews Kurth

Ms. Ellis may be contacted at lellis@HuntonAK.com
Ms. Leszinske may be contacted at cleszinske@HuntonAK.com