The Importance of Excess Liability Coverage
PURE Staff
April 28, 2025
With the risk of lawsuits on the rise, selecting excess liability coverage with the right limits is essential.
In today’s increasingly litigious society—partially fueled by large settlements, nuclear verdicts and legal system abuse—the need for personal excess liability insurance to protect your assets has never been greater. As the landscape of litigation risk evolves, it’s essential to select the right limits and the right insurance company, with the right resources, that will stand by your side should you ever experience a liability claim.
Several factors are driving up the risk of lawsuits and large judgments, including the perception that there is a lot to gain from a particular defendant. This can lead to angling for outsized jury awards. We are seeing this more and more as minor car accidents are increasingly turning into excess liability claims.
Litigation funding has also emerged on the scene in recent years. This practice involves third-party investors providing capital to plaintiffs in exchange for a share of the financial award. The infusion of funds makes it more challenging to settle cases for fair and reasonable sums.
These compounding factors don’t just affect the individual being sued, they impact insurance as a whole: When the cost of claims is higher than what is usual and customary (what’s known as “social inflation”), it can drive up insurance premiums.
Here to support you, when you need us most
As a reciprocal, we operate in the best interest of our membership. As stewards of our members’ capital, we work diligently to mitigate the impact of social inflation on the membership by partnering with a diverse panel of highly skilled lawyers from across the country, investing in jury research on our most complex cases and leveraging AI and technology to create models that predict bodily injury claims costs.
Additionally, as every state and jurisdiction operates differently, it’s more important than ever to partner with an insurance company that understands how to navigate these complex and often unfavorable legal environments for protection against financial harm.
How PURE supported one member through a legal battle
A member was involved in an auto claim in which the claimant filed a lawsuit seeking $275,000 in damages— which our Claims team found evidence did not support. When the claimant discovered the identity of our member, he amended the claim, seeking additional compensation, which climbed from $1.5 million to nearly $30 million by the time the case went to court. (The plaintiff attorney sent the claimant to multiple “experts” across the country looking for the right diagnosis and inflating the medical bills to impact the overall value of his claim.)
While settling can be a quicker, and sometimes less expensive resolution, PURE recognized that our member was being taken advantage of and fought on his behalf for several years. The dispute went to trial and the final judgment was rendered in favor of the member, who was found not liable for any damages to the claimant.
We are committed to advocating for our members, especially in the face of significant challenges, like being unfairly targeted in a legal dispute, to help protect their financial future.
Glossary
- Litigation Funding
- A financial arrangement where a third-party investor provides money to help cover the costs of a lawsuit
Often used for personal injury cases, this funding allows individuals who might not have the financial resources to pursue a legal case to move forward with litigation. In exchange, the investor receives a percentage of any settlement or judgment if the case is successful. Some argue that litigation funding can encourage frivolous lawsuits or increase the size of claims, contributing to higher legal costs and inflated verdicts.
- Nuclear Verdict
- An extremely large and unexpected financial award in a lawsuit, typically in the millions or even tens of millions of dollars
These verdicts are often seen as excessive and can result from high jury awards in personal injury or wrongful death cases, sometimes driven by emotional factors or aggressive litigation strategies.
- Social Inflation
- Refers to the rising costs of insurance claims, often due to changes in societal attitudes and legal trends
This includes factors like more frequent lawsuits, larger damage awards and an increase in “nuclear verdicts.” The term also reflects the influence of factors like economic inequality, aggressive litigation tactics and the growth of third-party funding in lawsuits. As these trends grow, insurance companies face higher costs to settle claims, which can lead to higher premiums for consumers.
