Tyler Kocis, Surety and Risk Advisor, Furman Insurance
Florida has seen a sharp rise in high-dollar legal cases, known as “nuclear verdicts,” significantly affecting the legal and insurance climate. This article delves into the ramifications of major auto verdicts on the insurance and roofing industry.
For roofing contractors, staying informed about these verdicts is crucial, as they directly influence insurance costs and coverage considerations, both of which have a large impact on overhead expenses and operating results.
Recent research conducted by the U.S. Chamber of Commerce Institute of Legal Reform has shed light on a startling trend: Florida has now outpaced California in the number of nuclear verdicts within the nation. What’s particularly striking is that Florida’s population is merely half that of California. Between 2010 to 2019, Florida reported an astounding number of over 200 nuclear verdicts, amounting to a total $35 billion in settlements. (Yes, the plaintiff’s attorneys received 35 percent or more of the settlements.)
The state’s high population density and often congested traffic conditions create fertile ground for complex legal disputes. Moreover, the presence of aggressive legal representation further intensifies the propensity for large auto verdicts, solidifying Florida’s prominence in this legal realm. While nuclear verdicts have emerged across the entire state, two counties, Broward and Miami-Dade, have emerged as the epicenter for these high-value litigation cases. Several contributing factors amplify Florida’s role in generating such substantial auto verdicts.
Major auto verdicts in Florida have resulted in increased automobile insurance premiums due to the heightened risk of severe losses by the insurance community. Roofing contractors often experience a spike in premiums as insurers reevaluate the risks associated with their industry and post-significant verdicts. Underwriters scrutinize past claims and industry trends that influence the unit cost premiums offered to roofing contractors.
Auto insurance policies may undergo modifications in response to significant verdicts. Insurers may revise policy terms, conditions and exclusions to mitigate potential losses associated with similar auto-related cases. Roofing contractors should carefully review their policies and consult with an experienced risk advisor to fully understand any changes that could affect their insurance protection.
Major verdicts can prompt insurers to reassess policy limits and deductibles (higher retentions) for auto insurance. Insurers may revise these parameters to align with the potential magnitude of losses, in an attempt to generate adequate return on the equity the insurance provider has exposed for the roofing contractor.
Insurance carriers are increasing the frequency of thorough risk assessments of roofing contractors in light of these substantial auto verdicts. They may recommend or mandate specific loss prevention measures, such as enhanced safety protocols, driver training programs or the implementation of in-cab driver cameras to mitigate risks and modify driver behaviors in an attempt to reduce the frequency of auto accidents.
Implement and enforce stringent safety protocols and training programs for all employees, especially those involved in driving your vehicles. Emphasize safety awareness and adherence to safety guidelines to minimize the risk of accidents that could lead to significant verdicts.
A well-documented and adhered-to driver selection and screening process (that conforms to your insurance carrier’s eligible driver criteria) is the first line of defense to protect your firm’s auto exposure. Provide ongoing training to employees on safe driving practices, defensive driving and regular updates on changes in traffic laws, industry standards and best practices to ensure they remain well-informed and capable of making sound decisions on the road.
Maintain accurate and comprehensive records of all safety training, maintenance activities and incident reports. Thorough documentation can serve as evidence of compliance with safety regulations and adherence to best practices, potentially reducing liability in case of legal disputes.
Leveraging telematics and monitoring systems to assess and analyze driver behavior, vehicle speed and other relevant factors can have a significant impact on managing the risk of your fleet. Utilizing data analytics to identify areas for improvement and customized training programs can allow the roofing contractor to better understand how their drivers are behaving and the reasons for incidents.
Regardless of the size of the roofing contractor’s fleet, nuclear auto verdicts undeniably influence the auto insurance industry climate in Florida and the industry is also projected to experience future cost increases. The strongest performing roofing professionals (from a frequency and severity perspective) will differentiate themselves from the lagging performers, which will allow for more competitive rates by the underwriting community. This in turn will create economic efficiencies for the contractor. Adapting to these changes and proactively managing risks through enhanced risk management disciplines is essential for roofing contractors to secure competitively priced, comprehensive insurance coverage to protect their business assets. A risk advisor will be able to guide you through the process.
Tyler Kocis, Surety and Risk Advisor, Furman Insurance, graduated from Indiana University of PA, with a Bachelor of Finance. Tyler can be reached for any questions or additional information at tyler@furmaninsurance.com or by cell at 954-994-9292.
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