Public transit agencies are facing a harder insurance market than at almost any point in recent memory — and the reasons go well beyond any single agency’s own safety record. Rising litigation costs, evolving legal exposure for public entities, workforce pressures, and new technology are converging to reshape how transit systems are underwritten and priced. Industry analysts have grouped the forces driving this shift into five interconnected risk pillars that agency leaders and risk managers should understand.

Pillar 1: Nuclear Verdicts, Social Inflation and Litigation Funding

The broadest force behind rising auto and umbrella pricing is happening well outside any individual agency’s control. Median “nuclear verdicts” — jury awards well beyond what a case’s actual damages would suggest — have climbed sharply since 2020, and verdicts exceeding $100 million, once a rarity, are becoming more common.

Two trends are accelerating the pattern. Third-party litigation funding is allowing plaintiffs’ attorneys to pursue larger, longer cases with outside financial backing, and so-called “reptile theory” courtroom strategies — which frame a defendant’s conduct as a danger to the community rather than to the plaintiff alone — are proving effective at driving up award size.

The result: commercial auto liability has been unprofitable for insurers for more than a decade, and rate increases are landing even on agencies with clean loss histories. Capacity providers often bucket public transit agencies alongside commercial trucking fleets for pricing purposes, even though transit systems are public entities with different risk profiles and regulatory obligations. That mismatch helps explain why an agency with a strong safety record can still see double-digit premium increases at renewal — a frustrating and increasingly common conversation between risk managers and their boards.

Pillar 2: Sovereign Immunity Erosion and the Common Carrier Standard

Public entities have traditionally relied on tort claims acts to cap damages and shorten the window in which claims can be filed. That protection is weakening. Plaintiffs’ attorneys are increasingly successful at working around — or directly challenging — those caps, and several states have seen legislative or judicial erosion of sovereign immunity protections in recent years.

Compounding the exposure, courts frequently hold transit operators to a heightened “common carrier” duty of care, particularly in cases where a safety regulation was violated. And the exposure isn’t limited to vehicle collisions. Failure to maintain equipment such as escalators or wheelchair lifts, failure to keep station property safe from slip-and-fall hazards, and failure to protect riders from third-party harm — including assaults in stations — are all active legal theories being tested against transit agencies.

Because tort caps and immunity protections vary significantly by state and shift as legislatures act, agencies benefit from regularly revisiting exactly what protection their state law does and doesn’t provide.

Pillar 3: Paratransit and ADA Exposure

Few areas of transit risk are growing faster than paratransit — and few are more likely to catch a general-liability program off guard. Securement failures, in which a wheelchair or mobility device isn’t properly tied down during transport, remain a leading driver of claims.

The nature of the exposure is also shifting. Physical assistance provided during loading and passenger transfers is increasingly treated by courts and insurers as a quasi-medical event falling under general liability, rather than a straightforward auto liability matter — a distinction that can open real coverage gaps if a program’s GL policy wasn’t structured with that risk in mind. Separately, abuse and molestation coverage has moved from a nice-to-have to a hard contractual requirement in many ADA paratransit and Medicaid non-emergency medical transportation (NEMT) programs.

Agencies running paratransit alongside fixed-route service should take a close look at where coverage gaps might exist, how securement training ties into loss control, and whether their contracts with paratransit partners meet current compliance expectations — a lesson reinforced when a federal investigation found Maryland’s MobilityLink paratransit service failed to meet ADA service standards.

Pillar 4: Workforce Shortage, Operator Assault and the Safety-Culture Loop

The workforce pressures facing transit agencies aren’t just an HR problem — they show up directly on the loss run. Assaults on transit workers have risen sharply over the past decade, and that frequency correlates closely with driver shortages and thinner training pipelines. When experienced operators leave and are replaced more quickly than training programs can fully absorb, claim frequency and severity both tend to rise, since newer operators are statistically more claim-prone.

The pillar points to a reinforcing loop: workforce strain increases risk, and rising risk makes retention harder. Breaking that cycle is where loss control and HR strategy start to overlap. De-escalation training, enforcement of rider codes of conduct, and mental-health and return-to-work programs are increasingly framed not as employee-wellness initiatives alone, but as direct investments in loss control.

Pillar 5: Telematics, AI Underwriting and the Data Transparency Gap

The final pillar looks forward. Telematics adoption is now mainstream across commercial and public fleets, and insurers are leaning more heavily on that data in underwriting and pricing decisions. That shift creates an opportunity many agencies haven’t yet captured: a significant share of fleets that haven’t shared telematics data with their carriers simply were never asked — meaning a straightforward conversation with a carrier could unlock premium credits already available to the agency.

At the same time, the rise of AI-assisted underwriting and claims processes raises new questions agencies should ask before signing data-sharing agreements — including how models are scored, what data is used, and what fairness or bias safeguards are in place. As these tools become more embedded in the insurance process, understanding them is quickly becoming as important as understanding the coverage itself.

The Bottom Line

None of these five pillars operates in isolation. A verdict environment that’s growing more severe, a legal landscape that’s chipping away at public-entity protections, an ADA program that’s expanding faster than some GL policies were built to handle, a workforce under strain, and a data landscape that rewards transparency — together, they explain why so many transit agencies are seeing renewal conversations that feel disconnected from their own safety performance.

Understanding each pillar is the first step toward addressing it. Contact CTIP to review your agency’s risk profile across all five areas, or reach out to David Cooper or Eddie Thomas to get started.

This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.