How Texas Stands Out in Tort Lawsuit Costs
Texas is no stranger to big numbers—whether you’re talking about its size, economy, or legal landscape. But one area where the Lone Star State makes an unfortunate mark is in tort lawsuit costs. With an average of $4,594 per household in 2022, Texas ranks 10th nationwide for its tort costs, even outpacing many larger states. What makes Texas different, and why does this matter to you as a resident?
A Legal System Known for High Stakes
One key factor is Texas’s reputation as a hub for large legal settlements, known as “nuclear verdicts.” These are jury awards that exceed $10 million and can add immense pressure on businesses and insurers. Because of this, companies often choose to settle even smaller cases for hefty amounts—even when fault is debatable—to avoid an unpredictable courtroom outcome.
When compared to places like Delaware or New York, Texas operates under unique conditions. Delaware, for instance, holds the top spot with $8,026 in tort costs per household. This is partly because it’s home to many major corporations that face frequent legal challenges. But unlike Delaware, which deals with a concentrated corporate environment, Texas’s costs are far-reaching, hitting both small businesses and large enterprises across multiple industries like oil, healthcare, and retail.
The Insurance Dilemma
Another standout issue in Texas is the strain on insurance markets. For context, Louisiana and Mississippi—states with similarly high tort costs—also struggle with litigation-heavy environments, which have left many insurers unwilling to operate in those states. Texas, ranked as the third-worst state for insurance litigation, is increasingly following this trend as some insurers exit the market. For consumers, this means fewer insurance options, higher premiums, and rising costs, even for basic coverage like auto or home insurance.
Proposed Texas Bills Aim to Tackle Rising Lawsuit Costs and Insurance Challenges
There are a couple of bills currently in progress in Texas that aim to address issues related to tort lawsuits and their financial impact:
- HB939: This bill proposes setting a liability limit for noneconomic damages in personal injury claims. Noneconomic damages typically include compensation for pain and suffering, emotional distress, or loss of companionship. By capping these damages, the bill aims to reduce the financial burden on businesses and insurance companies, which could, in turn, help lower costs for consumers. Filed on November 12, 2024. It is awaiting further review and discussion in the Texas House.
- SB779: This bill focuses on common law public nuisance claims. Public nuisance claims often involve lawsuits related to environmental or public health issues. The bill seeks to refine the legal framework for these claims, potentially reducing the number of frivolous or excessive lawsuits that can drive up costs for businesses and communities. This bill was introduced on January 14, 2025, and referred to the Senate State Affairs Committee on February 7, 2025. It is currently pending review by the committee.
Both bills are part of broader efforts to reform Texas’s legal system and address the rising costs associated with litigation. These measures aim to create a more balanced legal environment while still protecting the rights of individuals with legitimate claims. If passed, they could help alleviate some of the financial pressures on businesses and consumers in Texas.
Sources
TX HB939 | 2025-2026 | 89th Legislature
WINTER 2025
TX SB779 | 2025-2026 | 89th Legislature
https://legiscan.com/TX/bill/HB939/2025
https://www.tortreform.com/wp-content/uploads/2025/02/TLR_WinterAdvocate_2025_Final-1.pdf
https://legiscan.com/TX/bill/SB779/2025
Industries Feeling the Pinch
Industries like transportation and construction are hit particularly hard. While a commercial fleet owner in Texas might pay five to six times more for auto liability insurance now compared to just five years ago, businesses in Florida or New York—both with high tort costs—don’t always see such drastic increases. A major reason is Texas’s large rural highway network, which increases accident risks and litigation opportunities, compounding the problem further for companies that rely on transportation.
What Texas Can Learn
While Delaware and New York have their own challenges with hefty legal costs, they’ve adopted measures like specialized court systems for corporate cases to streamline litigation. Louisiana has implemented reforms aimed at reducing excessive lawsuits to some success. If Texas opts for similar reforms—such as increasing transparency in third-party litigation funding or setting more defined limits on damage awards—it could reduce some of these pressures for both businesses and households.
At the end of the day, understanding how Texas stacks up can help its citizens grasp why reform matters. High tort costs may feel like a big-picture issue, but their consequences hit close to home—pushing up grocery bills, increasing insurance premiums, and even limiting job opportunities in industries vital to the state’s economy. By addressing these differences, Texas has the opportunity to ease the burden and remain competitive not only locally but on a national scale.