59 Pages Posted: 10 Jun 2007 Last revised: 27 Nov 2012
Date Written: September 6, 2007
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.
Keywords: liability, insurance, torts, litigation costs, transactions costs
JEL Classification: K13, K41
Suggested Citation: Suggested Citation
Hersch, Joni and Viscusi, W. Kip, Tort Liability Litigation Costs for Commercial Claims (September 6, 2007). Vanderbilt Law and Economics Research Paper No. 07-16. Available at SSRN: https://ssrn.com/abstract=991696 or http://dx.doi.org/10.2139/ssrn.991696