In an era of huge jury awards, it’s imperative for hospitality businesses to understand the risks and take precautions
A $10 million lawsuit would be the nail in the coffin for nearly every hospitality business. However, the number of nuclear verdicts continues to rise. Recent data shows that U.S. juries awarded more than $14.5 billion in nuclear verdicts in 2023—a 15-year high.
Society Insurance has spent 110 years helping protect businesses and has seen firsthand how nuclear verdicts have evolved in the U.S. The company outlines below what a nuclear verdict is, their alarming rate of increase, and precautions for hospitality businesses to take to better protect themselves against these devastating verdicts.
What is a nuclear verdict?
Nuclear verdicts are when juries award more than $10 million in a case. According to the U.S. Chamber of Commerce, the number of verdicts above $100 million reached a record in 2023. In fact, they’re up nearly 400% from 2013, as reported in The Wall Street Journal’s 2024 article “‘Nuclear’ Jury Verdicts Rise Alongside American Anger.”
Be aware: Certain states are more prone to outsized jury verdicts. Between 2013 and 2022, California, Georgia, Florida, Illinois, New York and Texas accounted for 61% of such verdicts in the country.
What are the implications of the growing number of nuclear verdicts?
Ideally, nuclear verdicts would be eliminated in favor of fair and just verdicts for hospitality businesses. When juries award disproportionately high amounts in lawsuits—often from cases involving accidents, liquor liability, food safety issues or employee disputes—these multimillion-dollar awards can be a death sentence for hospitality businesses.
Even if the business doesn’t face a verdict, the prevalence of such cases can drive up insurance premiums industry-wide, increasing operating costs. Outside of the hospitality industry, nuclear verdicts “affect almost everything, from the prices of common household products to availability and affordability of insurance,” said Oriana Senatore, senior vice president of research and strategic development at the U.S. Chamber of Commerce Institute for Legal Reform.
The need for regulation to curb these excessive awards is paramount.
How can businesses better protect themselves against nuclear verdicts?
To protect their financial stability, brand integrity and long-term viability in a competitive industry, foodservice businesses should take steps to minimize their exposure to lawsuits. Examples include:
- Investing in your operations and procedures to best ensure the safety of your customers and staff.
- Revisiting your food safety protocols.
- Regularly training your staff.
- Storm-proofing your building’s exterior.
- Taking precautions to avoid slips.
- Leveraging security when necessary.
- Asking your insurance provider for tips on how you can get your business into tip-top safety shape.
Despite the increase in these types of verdicts, the restaurant/hospitality industry is experiencing phenomenal growth. For the first time in history, sales are forecast to top $1 trillion annually for restaurants this year, and it’s estimated the industry added 200,000 jobs in 2024. During this exciting time for hospitality, it pays to educate yourself about risks and take steps to minimize your exposure.
Please note: This is only a general description of coverages and is not a statement of contract. All coverages and limits are subject to the terms, definitions, exclusions and conditions in the policy. This information does not amend, modify or supplement any insurance policy. Consult the actual policy or your agent for details regarding available coverages. This information is provided as a convenience for informational purposes only. It is provided to assist you in recognizing potential unsafe work problems or conditions and not to establish compliance with any law, rule or regulation. This information does not constitute legal or professional advice. For a legal opinion, please seek legal counsel from a qualified attorney.
