Tort Costs Rising Faster Than Inflation and GDP, Study Finds

Tort costs in the U.S. have surged at an annual rate of 7.1% from 2016 to 2022, outpacing both inflation (3.4%) and GDP growth (5.4%), according to the latest report from the Institute for Legal Reform (ILR). The study estimates that total tort costs reached $529 billion in 2022, with commercial liability growing at a faster rate than personal liability. Of these costs, $296.5 billion were attributed to general and professional liability claims, while auto liability claims accounted for $215 billion.

The report highlights significant variations in tort costs across states. Wyoming had the lowest total at $676 million, while California led with over $72 billion. Some smaller states, like Louisiana, had disproportionately high tort costs per household. Tort costs as a percentage of GDP also varied widely, with Florida ranking among the highest at nearly 3.4%, compared to under 1.4% in states like Alaska and North Dakota.

Researchers point to differences in legal environments, litigation practices, and liability climates as key drivers of cost variations across states. The study also underscores concerns about the efficiency of the tort system, noting that a substantial portion of costs go toward litigation and administration rather than directly compensating claimants. With U.S. tort costs significantly higher than in other developed countries, the debate over legal system reforms continues.