Nuclear Verdicts Used to Be a Big-Company Problem. Not Anymore.

A $10 million jury verdict used to be a problem for Fortune 500 companies and major insurers. In 2024, it became a problem for the small businesses next door.

Small businesses with $10 million or less in revenue now carry 48% of U.S. commercial tort costs, even though they generate just 20% of commercial revenue, according to a 2023 Institute for Legal Reform analysis of Brattle Group data covering 2021. That works out to about $35 in tort costs for every $1,000 of revenue, versus less than $5 per $1,000 for the largest companies.

Nuclear verdicts, defined as jury awards of $10 million or more, hit a record $31.3 billion in 2024 according to Marathon Strategies, a 116% jump from the year before. A 2025 Swiss Re behavioral study found that in legal simulations, respondents awarded damages against small and midsize companies at nearly the same rate as against large corporations when injuries were serious. Yet most small business general liability policies cover just $1 million per occurrence. A single nuclear verdict could exceed that limit by $9 million or more before any umbrella coverage applies.

A nuclear verdict is a jury award of $10 million or more in a civil lawsuit. Legal professionals and groups like the Institute for Legal Reform use the term for awards that far exceed what defendants and their insurers expected. Awards above $100 million are sometimes called "thermonuclear" verdicts. Most civil cases settle before trial, but a nuclear verdict comes from a jury that has decided to send a message, sometimes in response to perceived corporate negligence or sympathy for a seriously injured plaintiff. Verdicts differ from settlements because juries, not negotiating parties, set the final award.

The $1 million per-occurrence limit most small businesses carry falls short at every nuclear verdict benchmark.

Even a business carrying both a $1 million general liability policy and a $1 million commercial umbrella policy has $2 million in total coverage, which is less than 15% of the $13.8 million average simulated award against small and midsize businesses in Swiss Re's behavioral study. Verdicts can be reduced on appeal or through settlement, but the initial exposure far exceeds what most small businesses carry.

Marathon Strategies tracked 135 nuclear verdicts against corporations in 2024, up 52% from 89 in 2023. Total payouts in its dataset hit $31.3 billion, more than double the $14.5 billion the year before. Marathon reported a median of $51 million among the verdicts it tracked, up from $44 million in 2023 and $21 million in 2020. Five verdicts crossed the $1 billion mark, up from two in 2023.

Thermonuclear verdicts (above $100 million) grew 81%. Marathon Strategies tracked 49 thermonuclear verdicts in 2024, up from 27 in 2023 and just five in 2020. The growth rate for the largest awards has outpaced overall verdict growth every year since 2020.

The Institute for Legal Reform studied 1,288 nuclear verdicts from 2013 to 2022 and found an average payout of $89 million and a median of $21 million. That 10-year ILR median matches Marathon Strategies' $21 million single-year median for 2020, but the figures describe different things. The ILR figure covers a full decade. Marathon's is a year-by-year snapshot that climbed to $51 million by 2024. Product liability verdicts grew fastest. The median rose 50%, from $24 million in 2013 to $36 million by 2022. The Institute for Legal Reform also found that noneconomic damages (money awarded for pain, suffering and emotional distress) exceeded economic and punitive damages combined in six of the 10 years it studied. Because noneconomic damages can exceed measurable financial losses, verdict size is harder for small businesses and insurers to predict. (Note: The ILR is affiliated with the U.S. Chamber of Commerce. No independent federal dataset currently tracks nuclear verdicts, so industry-affiliated research from the ILR, Marathon Strategies and Swiss Re provides the most complete picture of nuclear verdict trends currently available.)

Swiss Re's 2025 Behavioral Social Inflation Study surveyed 1,150 U.S. adults and presented them with randomized legal scenarios involving slip-and-fall incidents, motor vehicle accidents and product liability claims. Injury severity, not company size, drove award amounts.

When plaintiffs in Swiss Re's simulations suggested a $100 million award in a motor vehicle accident case, average simulated awards jumped to $20 million against large corporations and $13.8 million against small and midsize businesses. Without those suggested amounts, simulated awards stayed below $1 million for both groups. Swiss Re's researchers said the anchoring effect was one of the strongest predictors of award size in the study.

The share of respondents who issued nuclear-level awards was 30% for large corporations and 25% for small and midsize businesses. That five-percentage-point spread is narrower than the gap most small business owners assume. And 67% of respondents still supported punitive damages against small and midsize businesses, compared with 79% against large corporations.

Businesses earning under $10 million pay $35 in tort costs for every $1,000 in revenue, according to the Institute for Legal Reform's tort cost study. Businesses earning $50 million or more pay less than $5 per $1,000. That 7-to-1 ratio leaves small businesses with a disproportionate share of legal system costs even before a nuclear verdict enters the picture.

Marathon Strategies' data shows nuclear verdicts landed in 34 states in 2024, up from 27 in 2023, across 77 courts, up from 65. Businesses in states once considered low-risk litigation markets are now seeing multimillion-dollar awards, and small businesses in those markets are reassessing coverage needs.

Texas led all states in verdict count with 23 nuclear verdicts, even though Nevada led in total dollars with $8.5 billion across just four cases. The Institute for Legal Reform found that California, Florida, New York and Texas produced roughly half of all nuclear verdicts between 2013 and 2022. But geographic spread is widening: 55 industries in Marathon Strategies' dataset saw at least one nuclear verdict in 2024, up from 48 in 2023.

The Institute for Legal Reform's 10-year analysis found three case types drove the most nuclear verdicts: product liability (23.3%), auto accidents (23.2%) and medical liability (20.3%). Product sales, vehicle operations and health-related services put small businesses closest to the case types driving most nuclear verdicts.

The share of Americans who say there are too many lawsuits dropped from 90% in 2016 to 56% in 2025, according to Swiss Re. And 76% now say damages are too low or about right, up from 58% in 2016.

Age shaped award views in Swiss Re's study. Respondents under 40 were the most plaintiff-friendly: 83% said current damages are appropriate or too low. Only 41% of those over 60 agreed. Democrats selected award amounts 25% to 65% higher than Republicans, and the gap widened when plaintiff attorneys requested larger sums.

The reptile theory bypasses case-specific evidence and triggers a survival response in jurors. Anchoring, a second plaintiff tactic, plants a large dollar figure early in trial to frame expectations before deliberation begins. The Swiss Re study showed anchoring works against small businesses nearly as well as against large ones. For small business defendants, jury psychology can determine award size as much as the underlying facts.

Third-party litigation funding has also expanded. Outside investors now take a larger role in financing lawsuits in exchange for a share of the eventual payout. That can prolong cases and push plaintiffs to hold out for larger awards. Swiss Re's Monica Ningen said litigation funding drives up awards and loss ratios across commercial auto, medical malpractice and general liability lines.

Nuclear verdicts push small business insurance costs higher by feeding social inflation, the industry's term for claims costs rising faster than standard economic inflation. Swiss Re's sigma 4/2024 report found that social inflation contributed about 7 percentage points to U.S. liability claims growth in 2023. Marsh's Q3 2024 Global Insurance Market Index reported that U.S. casualty rates rose 10%. Excess and umbrella lines led the increase. The National Association of Insurance Commissioners has identified social inflation as one of the top issues affecting property and casualty pricing.

Nuclear verdicts in Georgia climbed steadily from 2013 to 2024. MoneyGeek's analysis of Georgia general liability costs estimates verdict-related pressures add roughly $1,370 per year to the average small business policy in the state, about 94% of Georgia's $1,452 average annual general liability premium. Georgia's insurance commissioner projects the state's 2025 tort reform will reduce premiums by 3% to 5%.

Excess and umbrella policy rates grew fastest among U.S. casualty lines, according to Marsh's Q3 2024 data. General liability and commercial auto costs have also increased in many markets. For small businesses, the result has been higher premiums, larger deductibles and, in some markets, difficulty finding coverage.

Florida's 2023 tort reform produced the clearest results so far. After it took effect, several major auto insurers filed rate reductions of 6% to 10.5%, Risk & Insurance reported. Litigation fell nearly 30% from peak levels, the same report says. Marathon Strategies' data shows Florida dropped from second in the nation for nuclear verdicts (2009 to 2022) to 10th in 2024.

Georgia passed sweeping reform through Senate Bills 68 and 69, which limit anchoring testimony and create new fault apportionment rules. West Virginia and Iowa each capped noneconomic damages at $5 million in commercial motor vehicle lawsuits. But reform doesn't always pass: Texas saw a major reform bill fail in its 2025 legislative session.

Tort reform is contested. Groups like the American Association for Justice argue that damage caps can deny seriously injured people fair compensation, and that the real problem is corporate conduct, not jury awards. Reform debates in each state will shape insurance costs and liability exposure for small businesses.

Small business liability exposure spans multiple policy types, and no single policy covers every claim category. A customer injury, vehicle crash or product-related lawsuit can move beyond standard limits quickly.

General liability insurance covers many third-party bodily injury, property damage and advertising injury claims. It's the baseline policy for most small businesses, but it doesn't cover professional errors, employee injuries, vehicle crashes or cyber incidents, which require separate policies. Standard per-occurrence limits of $1 million also won't cover a nuclear verdict. Premiums vary widely by industry and state, according to MoneyGeek's general liability cost data.

Commercial umbrella insurance adds liability limits above base general liability, commercial auto and employer's liability policies. A $5 million umbrella costs less per dollar of protection than raising each underlying policy separately, and most insurers offer it as an add-on to existing commercial coverage.

Commercial auto insurance pays for covered liabilities tied to business-owned or work-used vehicles. Marathon Strategies tracked eight nuclear verdicts in trucking alone in 2024. Businesses with delivery vehicles, service fleets or employee drivers carry concentrated commercial auto exposure.

Professional liability insurance (also called errors and omissions) covers legal costs and settlements when clients claim advice or services caused financial harm. Industries like consulting, accounting, architecture and technology carry the most professional liability insurance risk. Premiums vary widely by industry and business size.

Workers' compensation insurance covers job-related employee injuries and can reduce employer lawsuits tied to workplace incidents. Most states require workers' comp for businesses with employees, and workers' comp costs vary by industry, state and claims history.

Nuclear verdict counts, total dollars and geographic reach have all increased year over year since 2020 in Marathon Strategies' dataset. Thermonuclear verdicts above $100 million are growing faster than any other category. Recent data shows continued growth. No clear signs of a slowdown have emerged.

State-level tort reform will shape small business insurance costs over the next two to three years. Florida's results show that well-designed legislation can reduce both verdicts and premiums. But the failure of Texas' 2025 bill shows that reform support is uneven. Businesses in states without new caps remain in a higher-exposure environment.

Younger Americans are more sympathetic to plaintiffs and less skeptical of large awards, per Swiss Re's jury attitude data. As these age groups fill more jury seats, the risk of outsized verdicts will grow. Nuclear verdict risk for small businesses will increase as jury demographics shift.