AM Best says commercial auto liability insurance in the US has seen claim costs rise by 6.4% annually over the past decade, outpacing average economic inflation of 2.8%. The ratings agency attributes this to social inflation, which it defines as the rising cost of claims above general inflation, driven by factors such as higher jury awards and broader definitions of liability.
Policy limits for commercial auto liability are typically $1 million, with claims above this threshold moving to umbrella policies. AM Best notes that, until 2018, umbrella pricing tracked closely with general liability pricing. As social inflation began to affect commercial auto claims, losses have increasingly spilled into umbrella coverages, pushing umbrella policy pricing higher and away from general liability trends.
This trend puts additional pressure on insurers’ underwriting strategies and risk models. Commercial policyholders may face higher premiums and stricter terms as insurers adjust to these cost increases. The report suggests continued monitoring of litigation trends and pricing responses across the sector.
