The Wall Street Journal editorial board stated in a June 9 opinion piece that plaintiff's attorney tactics, such as seeking outsized damages, are driving up car and homeowner insurance costs for policyholders.
"Litigation abuse is also growing as plaintiff firms sue insurers for inflated damages," said the editorial board. "Unscrupulous plaintiff attorneys are also driving up homeowner premiums, using a playbook they developed in Florida. Harder to manage is regulatory and legal uncertainty, which is why insurers are retreating from some states. California regulators don't allow insurers to fully price rising wildfire risk and reinsurance costs into premiums."
While politicians such as Senator Elizabeth Warren have blamed rising insurance costs on climate change and corporate greed, the Wall Street Journal reported that higher insurance costs are being driven primarily by a combination of inflation, excessive litigation, and "government-made" issues. Weather-related events such as wildfires are causing some damage, but the higher costs of insurance can often be tied directly to litigation and the role of trial attorneys.
Nationwide, the cost of car insurance has risen 46.2% since January 2020, according to the Wall Street Journal. In California, homeowners insurance rates have seen some of the steepest increases out of any state in the country, rising 48.4% since 2019.
According to a press release from the American Tort Reform Association (ATRA), excessive lawsuits are negatively impacting California’s taxpayers and businesses. The state loses more than 787,000 jobs each year due to the costs of these excessive lawsuits, which also cost every California resident an extra "tax" of nearly $2,120 each year. Some of this litigation includes "no-injury" lawsuits, which take advantage of laws like the Americans with Disabilities Act to win settlements despite the absence of actual harm. Others rely on "dubious junk science" to file "baseless" personal injury claims.
The Northern California Record reported that rising insurance costs due to excessive litigation are particularly impacting low-income Californians, who are already grappling with high inflation. Car insurance costs increased by 24% last year and are projected to rise another 7% in 2024. Due to these rising costs, low-income California families are struggling to afford basic expenses.