The Nuclear Verdict Crisis: How Million-Dollar Jury Awards Are Reshaping Construction Insurance in 2025

Construction companies across America are facing an unprecedented threat that could bankrupt even the most successful operations overnight. The number of nuclear verdicts—those that surpass $10 million—rose to 135 in 2024, a 52% increase over 2023. The total sum of these verdicts was $31.3 billion, a 116% jump over the prior year. For construction businesses, this explosive growth in massive jury awards represents a fundamental shift in how they must approach risk management and insurance coverage.

Nuclear verdicts, defined as jury awards exceeding $10 million, have become increasingly common in construction-related litigation. In 2023, the median nuclear verdict rose to $44 million, up from $21 million in 2020. Even more alarming, “thermonuclear verdicts” of $100 million or more increased to 49 last year, with five of those cases resulting in verdicts greater than $1 billion.

Construction Industry Hit Hard by Verdict Inflation

The construction industry has been particularly vulnerable to this trend. The construction industry has seen liability insurance limits drop by approximately 60% over the past decade, while manufacturing saw a 39% decrease and the chemical industry experienced a 50% reduction. This dramatic reduction in available coverage comes at a time when construction companies face increasing exposure to catastrophic losses.

Nuclear verdicts typically focus on construction site body injury claims, on-site property damage and other potentially costly timeline or project risks. For excavating and site work contractors, these risks are particularly acute given the nature of heavy equipment operations and the potential for serious accidents.

The Perfect Storm: Multiple Factors Driving Nuclear Verdicts

Several interconnected factors have contributed to this explosion in massive jury awards. The report attributes the growth of nuclear verdicts to many factors including corporate mistrust, social pessimism, erosion of tort reform and public desensitization to large numbers. Additionally, elements leading to nuclear verdicts include a legal strategy called “reptile theory,” the pandemic-induced concept of “social inflation,” and “litigation funding.”

The reptile theory, in particular, has proven devastating for construction companies. This legal strategy encourages plaintiffs’ attorneys to paint contractors as threats to community safety, making juries more likely to award punitive damages. If the plaintiff’s counsel can successfully paint the picture of gross negligence against the “little guy,” then the possibility of a nuclear verdict grows.

Impact on Construction Insurance Markets

The insurance industry’s response to nuclear verdicts has been swift and dramatic. Carriers are likely to continue reducing the limits they once provided. “Reinsurers are no longer offering the same coverage limits they once did. For instance, where a business may have purchased a $25 million umbrella in the past, today they might only be able to secure a $10 million umbrella.”

This reduction in available coverage creates a dangerous gap for construction companies. In many cases, the damages awarded in nuclear verdicts can exceed the limits of an insurance policy, leaving the insured responsible for covering the difference out of pocket. For a local excavating contractor, this could mean personal bankruptcy and the end of a family business.

Protecting Your Construction Business

Despite these challenges, construction companies can take proactive steps to protect themselves. Having a very proactive response to litigation with early investigation and strategic evaluation is key. Training claims management to be proactive can give defendants a leg up.

For site work contractors providing Site Work Services Saratoga County NY, implementing comprehensive safety protocols becomes even more critical. Every accident prevented is a potential nuclear verdict avoided. This includes regular equipment maintenance, thorough employee training, and strict adherence to safety regulations.

The Road Ahead for Construction Companies

The nuclear verdict crisis shows no signs of slowing down. With the advent and increased adoption of AI technology and a changing political landscape on both national and state levels, 2025 could prove an interesting year for how the industry evolves in managing claims.

Construction companies must adapt their risk management strategies to this new reality. This includes working with experienced insurance brokers to secure adequate coverage, implementing robust safety programs, and maintaining detailed documentation of all safety procedures and training. The companies that take these threats seriously and prepare accordingly will be the ones that survive and thrive in this challenging environment.

The nuclear verdict crisis represents a fundamental shift in the construction industry’s risk landscape. While the threat is real and growing, companies that understand the risks and take proactive measures to address them can continue to operate successfully. The key is recognizing that in today’s litigious environment, prevention truly is worth more than any cure.