As auto insurance rates continue to rise across the country, critics are increasingly pointing to what they describe as rampant abuse of the legal system by trial lawyers.
Patricia Hillis, CFO and General Manager at Signal Hill-based Pete’s Plumbing, is among those raising alarms about the growing financial burden on consumers, arguing that tort reform is essential to curbing rising insurance premiums.
“According to a new report by the U.S. Chamber of Commerce, lawsuits are out of control,” Hillis said on Facebook.
Citing a report from the U.S. Chamber of Commerce Hillis highlighted the significant impact of tort lawsuits on household costs.
Hillis noted Delaware tops the list, with an average of $8,026 in costs per household, followed by New York ($7,027), Washington D.C. ($6,347) and Florida ($5,768). Other states like New Jersey, California and Connecticut are also seeing significant impacts, with costs ranging from $5,429 to $5,133 per household.
Hillis noted the report includes one bright spot.
“The only state which made improvements in tort reform was West Virginia,” she said.
“Having an extra $5,429 in a family budget would be huge for most of us across the country,” Hillis remarked, emphasizing the real-world impact of these inflated insurance costs on everyday Americans. “For many families, this is a lot of money that could go toward more essential expenses, like groceries, healthcare, or saving for retirement. The attorneys I worked with and who taught me the most about the law would be appalled by what’s happening here. This is not the justice system they believed in.”
Hillis, who has spent years in the business world, expressed frustration with the legal environment that allows these costs to balloon.
“I know having an extra $5,429.00 in a family budget would be huge for most of us across the country,” she said. “The attorneys I worked for and taught me the most about the law would be appalled. There has to be pushback on the abuse going on out there. Lawmakers, are you listening?”
As car insurance rates continue to rise across the U.S., California drivers have faced a 50% hike in premiums in 2024.
Experts point to the state's legal environment, particularly its no-fault insurance system, as a key factor driving these increases.
In states like California, where drivers file claims with their own insurance companies regardless of who caused the accident, no-fault systems are intended to streamline claims. However, critics argue that these systems have created opportunities for insurance fraud, further inflating costs.
Cassie Sheets, a data journalist at Insurify, highlighted the impact of no-fault laws in a recent report, explaining that while these systems are designed to speed up claims, they have inadvertently led to significant abuse regarding accident claims.
“No-fault systems have provided opportunities for fraud, which contributes to the rising insurance premiums we’re seeing,” Sheets wrote.
Adding to the financial strain, tort lawsuits—legal claims seeking compensation for damages—are another major contributor to the increasing cost of auto insurance.
Tort cases in high-cost states like California often result in large settlements, and the financial burden of these cases eventually falls on consumers through higher premiums.
According to the U.S. Chamber of Commerce’s Institute for Legal Reform (ILR) Tort Costs in America report, cited by Hillis, the cost of the U.S. tort system reached $529 billion in 2022, or $4,207 per household.
This figure continues to grow, with an annual increase of 7.1% overall and 8.7% in business-related cases. If current trends persist, tort costs could exceed $900 billion by 2030.
The ILR also warns that the tort system is increasingly being exploited by plaintiffs' lawyers who engage in deceptive practices, file frivolous lawsuits, or rely on third-party funding that reduces compensation for those harmed.
ILR notes these abuses are turning the legal system into a profit-driven industry that harms consumers and businesses alike.
In California, the legal environment has earned the state a reputation as a "Judicial Hellhole," according to the American Tort Reform Association (ATRA).
ATRA’s annual report criticizes the California Supreme Court for expanding liability and overlooking precedents.
Despite these issues, ATRA notes state leaders appear to embrace the state's Judicial Hellhole status, further exacerbating the already challenging litigation climate.