The Wall Street Journal editorial board stated in a June 9 opinion that excessive litigation and “unscrupulous” attorneys are contributing to rising car and home insurance rates.
“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. Unscrupulous plaintiff attorneys are also driving up homeowner premiums, using a playbook they developed in Florida.”
Since January 2020, the cost of car insurance nationwide has surged by 46.2%. Politicians like Senator Elizabeth Warren attribute this rise to climate change and corporate greed. However, the Wall Street Journal argues that the primary drivers are inflation, excessive litigation, and “government-made” issues. According to the editorial board, while weather-related events such as wildfires contribute to some of the damage, the increase in insurance costs is more directly linked to litigation and the influence of trial attorneys.
According to Bankrate, Nevada drivers are paying an average of $3,068 each year for full coverage car insurance, more than the national average of $2,311.
A press release from the American Tort Reform Association (ATRA) indicates that one tactic plaintiff attorneys use to attract more claimants for lawsuits is engaging in large advertising campaigns. Nevada trial attorneys spent more than $137.2 million on legal services advertisements in 2023 alone, resulting in more than $1.6 million ads. “Trial lawyers continue to pump significant money into these ad buys because, armed with more clients, they can boost settlements and payouts when they go after large corporations, ultimately raking in larger contingency fees for themselves,” said ATRA President Sherman “Tiger” Joyce.
The Insurance Information Institute (III) states that these excessive lawsuits force insurance providers to raise rates for their policyholders. “The price of insurance is the effect, not the cause of risk, and there must be more work done to curb legal system abuse,” said III CEO Sean Kevelighan. He added that auto insurers – both personal and commercial – are seeing significant increases in claims costs when attorneys enter into the picture.
