Nuclear verdicts have become one of the most important issues impacting liability insurance, umbrella coverage, and overall insurance costs. Insurance Journal recently reported that in 2025 there were nearly 200 of these verdicts, resulting in an award of at least $10 million – a 40.7% increase since 2024.
A nuclear verdict is generally defined as a jury award exceeding $10 million. These cases often involve allegations of severe bodily injury, wrongful death, construction accidents, premises liability, or other catastrophic events. Years ago, a $1 million verdict was considered enormous. Today, multimillion-dollar awards have become significantly more common, and verdicts exceeding $50 million or even $100 million are no longer unheard of. Industry research continues to show that both the frequency and size of these verdicts have increased substantially over the past decade. Even when a case ultimately settles for less, the threat of an enormous jury verdict can dramatically increase defense costs and settlement demands.
There is no single cause for the increase in nuclear verdicts. Instead, several trends have converged to create an environment where large jury awards are becoming more common.
- Changing Juror Attitudes – Many legal experts point to a growing skepticism toward businesses and organizations. Jurors are often more willing to hold property owners, corporations, and institutions financially accountable, even when liability is disputed. This shift has contributed to what the insurance industry calls social inflation, where claim costs grow faster than economic inflation.
- Third-Party Litigation Funding – Investors can finance lawsuits in exchange for a portion of any recovery, allowing plaintiffs to pursue cases longer and more aggressively. Third-party litigation funding has become increasingly common and is associated with prolonged litigation, larger settlement demands, and larger verdicts.
- Higher Expectations for Compensation – Large verdicts receive significant media attention. As jurors become accustomed to hearing about eight- and nine-figure awards, their perception of what constitutes reasonable compensation may change.
- Challenging Legal Environments – Certain states have historically produced a disproportionate number of nuclear verdicts. New York consistently appears among the states with the highest concentration of these large judgments.
Many board members assume nuclear verdicts only impact large corporations. Unfortunately, condominium and cooperative buildings face significant exposures of their own. Consider some common situations that can lead to major lawsuits: a contractor falls while working on the property, a visitor suffers a catastrophic injury in a common area, or a board is accused of improper management or governance decisions. When a serious injury occurs, the building, board, management company, and contractors can all be named in the lawsuit. Even if the association is ultimately found only partially responsible, defense costs and settlements can be substantial.
Insurance carriers and reinsurers evaluate emerging legal trends when setting rates. As nuclear verdicts become more common, carriers must account for the possibility of paying significantly larger claims. The results can include higher premiums, increased umbrella and excess liability costs, reduced capacity from insurers, higher deductibles or retained limits, and more restrictive underwriting requirements.
Plenty of community associations have experienced these changes firsthand during recent renewal cycles.
Although no one can eliminate the risk entirely, several steps can help reduce exposure.
- Review Liability Limits – A liability limit that seemed adequate ten years ago may not provide the same level of protection today. Boards should regularly review their General Liability, Directors & Officers Liability, and Umbrella coverage.
- Maintain Stronger Risk Transfer – One of the best defenses is ensuring vendors and contractors provide proper insurance and indemnification agreements. The importance of hold-harmless and indemnification provisions in contractor agreements cannot be overstated
- Consider Umbrella and Excess Liability Coverage – As verdicts continue to grow, higher excess liability limits may be necessary to protect association assets and unit owners.
- Evaluate Specialized Coverage – Depending on the building’s operations and exposures, coverage such as Directors & Officers Liability, Environmental Liability, and Employment Practices Liability may help address risks that are increasingly leading to expensive litigation.
A serious liability claim today can look very different than it did a decade ago. What once may have been a manageable lawsuit can now result in an exposure that threatens association finances and drives significant increases in insurance costs. As the legal landscape evolves, understanding nuclear verdicts is no longer optional. It is becoming an essential part of protecting your community, your residents, and your organization’s financial future. Reach out to us anytime to make sure you’re properly protected.
