Tort Liability Litigation Costs for Commercial Claims
Vanderbilt University - Law School; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - College of Arts and Science - Department of Economics; Institute for the Study of Labor (IZA)
W. Kip Viscusi
Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics
September 6, 2007
Vanderbilt Law and Economics Research Paper No. 07-16
This paper analyzes tort liability litigation costs using the Texas Department of Insurance Commercial Liability Insurance Closed Claim database for the years 1988-2004. Insurer costs to defend claims in which a suit was filed average $35,000 per claim in 2004$, which corresponds to a share of 0.18 of total expenditures. Claims with higher stakes and complexity lead to greater reliance on outside counsel and less reliance on in-house counsel. Total transactions costs for each dollar received by claimants average $0.75 for all claims and $0.83 for claims in which the claimant retained an attorney and a suit was filed.
Number of Pages in PDF File: 59
Keywords: liability, insurance, torts, litigation costs, transactions costs
JEL Classification: K13, K41
Date posted: June 10, 2007 ; Last revised: November 27, 2012
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