Patterns in Personal Automobile Third-Party Bodily Injury Litigation: 1977 - 1997
25 Pages Posted: 13 Sep 2004
Date Written: September 7, 2004
The U.S. tort system has been the focus of considerable media and scholarly attention in recent years, particularly with regard to the perceived ease with which parties sue each other and the size of damages awarded. Despite a widely held belief that American society has become increasingly litigious over time, the empirical evidence presented to date can support or refute such a claim. This study employs a unique data set of automobile insurance third-party claims closed between 1977 and 1997 to examine litigation trends. We test whether the likelihood that an injured party retains an attorney to assist in the resolution of an insurance claim increased during this time period. We also test whether the likelihood that an injured party files a legal claim has increased. The data set includes paid claim records, but not records for insurance claims that did not result in a paid settlement, from a sizeable cross section of the U.S. automobile insurance industry.
We find evidence that the use of attorneys by injured parties has increased. The likelihood of a legal claim being filed, however, is found to decrease over the period of the study. We conjecture that the informational role attorneys play as agents for ill informed injured parties explains the apparent paradox in our findings.
Keywords: litigation, information
JEL Classification: D8, K13
Suggested Citation: Suggested Citation