Liability Insurance and the Rules of Evidence
Sometimes Courts Will Allow Discussion of Insurance in Personal Injury Cases and Tort Claims
Most tort cases (including personal injury and workers compensation) involve insurance coverage – liability insurance specifically.
Many breach of contract claims, insurance coverage disputes, and business tort cases (misappropriation of trade secrets, tortious interference, etc.) also do.
But the proof of liability insurance coverage and the amount of coverage the defendant has is information kept from the jury in many trials. This is because evidence rules in Virginia and jurisdictions across the nation restrict a plaintiff’s use of evidence of insurance at trial. Indeed, every jurisdiction follows this rule.
Many rules, however, have exceptions. And this is true of the general rule holding evidence of liability insurance inadmissible.
This article’s purpose is to discuss when proof of liability insurance is admissible at trial. I hope you (or your attorney) use this information to prepare your case and bring and respond to motions in limine so that you recover the money damages you deserve.
If you have questions or would like a free consultation with a top-rated personal injury lawyer, call now: (804) 251-1620 or (757) 810-5614. My firm has helped hundreds of accident victims recover fair personal injury settlements. And we want to help you and your family.
What is Liability Insurance?
The term “liability insurance” is difficult to define. But this has not stopped legal dictionaries and courts from trying.
Black’s Law Dictionary (10th Edition) has defined liability insurance as “an agreement to cover a loss resulting from the insured’s liability to a third party, such as a loss incurred by a driver who injures a pedestrian.”
And one federal court has stated that liability insurance has these characteristics:
- The insurer is paid to take the risk in question;
- the insurer is able to pay;
- the insurer has agreed to indemnify the insured from liability to third persons as contrasted with coverage from losses sustained by the insured;
- the insurer will spread the loss among its policyholders;
- the insured will be disinclined to take any action which might cause the insurer to pay on a liability claim since the insured’s premiums will rise; and
- the insured is insuring a future risk.
Liability insurance may also include the insurer’s agreement to defend the insured or to pay legal fees for defending the claim – even if the insured is not found liable.
Does the Defendant Have to Tell Me About Insurance Coverage?
Yes. Insurance agreements are discoverable in litigation.
But discoverability is not the same as admissibility.
Rule 26 of the Federal Rules of Civil Procedure explains what a litigant must disclose without waiting for a discovery request. It reads that party must provide:
[F]or inspection and copying as under Rule 34, any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to satisfy the judgment.
The Advisory Committee Notes explain the rule’s rationale:
Disclosure of insurance coverage will enable counsel for both sides to make the same realistic appraisal of the case, so that settlement and litigation strategy are based on knowledge and not speculation. It will conduce to settlement and avoid protracted litigation in some cases, though in others it may have an opposite effect.
The amendment is limited to insurance coverage, which should be distinguished from any other facts concerning defendant’s financial status:
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- Because insurance is an asset created specifically to satisfy the claim.
- Because the insurance company ordinarily controls the litigation.
- Because information about coverage is available only from defendant or his insurer.
- Because disclosure does not involve a significant invasion of privacy.
Disclosure is required when the insurer “may be liable” on part or all of the judgment. Thus, an insurance company must disclose even when it contests liability under the policy, and such disclosure does not constitute a waiver of its claim. It is immaterial whether the liability is to satisfy the judgment directly or merely to indemnify or reimburse another after he pays the judgment.
Even if you file your lawsuit in state court instead of federal court, insurance agreements are discoverable. But you may have to serve a formal discovery request to get them (interrogatories or request for production of documents).
I recommend obtaining these documents because they can help you determine the likelihood of collecting a judgment.
What Do the Rules of Evidence Say About Liability Insurance?
Where you decide to file your lawsuit – and what court you select – determines what evidence rules apply to your case.
Let’s review the rules on evidence of liability insurance in the courts I practice the most – federal and state courts in Virginia.
Rule 411 of the Federal Rules of Evidence
The Federal Rules of Evidence apply to your case if your lawsuit alleges that a federal district court has jurisdiction over the dispute.
Federal Rule 411 reads as follows:
Evidence that a person was or was not insured against liability is not admissible to prove whether the person acted negligently or otherwise wrongfully. But the court may admit this evidence for another purpose, such as proving a witness’s bias or prejudice or proving agency, ownership, or control.
Rule 2:411 of the Virginia Rules of Evidence
The Rules of Evidence in Virginia are similar to the Federal Rules of Evidence on many issues. For example, this is true of evidence of insurance coverage.
Rule 2:411 of the Virginia Rules of Evidence addresses insurance. It states:
Evidence that a person was or was not insured is not admissible on the question whether the person acted negligently or otherwise wrongfully, and not admissible on the issue of damages. But exclusion of evidence of insurance is not required when offered for another purpose, such as proof of agency, ownership, or control, or bias or prejudice of a witness.
What is the Reason for Excluding Evidence of Insurance? How this Rule Protects Insurers
Legislatures and courts have given three reasons to exclude evidence of liability insurance to prove that a person acted negligently or recklessly.
First, there is no proof having (or not having) liability insurance makes a person more likely to act negligently. Courts, therefore, consider evidence of liability insurance to prove negligence irrelevant.
As one federal judge explained:
In the average automobile case the evidential hypothesis [prohibited by Rule 411] would be: “an insured person is more apt to be careless, reckless or do an intentional harm than an uninsured person because some one else will pay for any damages caused by his activity.” The probative force of this line of proof is almost nil … [The driver] knows that accidents result in higher premium rates for his future policies, so that there is an economic incentive not to be involved in accidents.
Second, there is a “feeling that knowledge of the presence or absence of liability insurance would induce juries to decide cases on improper grounds.” And that the jury would be more likely to penalize insurance companies and find fault or allow higher verdicts because the insurer has deep pockets.
Put another way – the jury may disregard the facts and law and rule for the plaintiff because it knows that an insurance company with plenty of money will pay.
This rationale is why the Virginia Supreme Court has stated: “The public policy forbidding the mention of insurance is for the benefit and protection of the insurer.” Prohibiting the plaintiff from mentioning insurance coverage in liability cases is meant to prevent bias or prejudice on the jury’s part.
Third, allowing evidence of insurance coverage to prove wrongful conduct would discourage persons and businesses from purchasing insurance. This would make it more difficult for accident victims to recover fair compensation for their injuries and to be made whole.
Don’t Jurors Assume the Defendant Has Liability Insurance in an Auto Accident Case?
Yes. Jurors likely assume the defendant has liability insurance coverage in cases involving motor vehicle accidents, defective products, slip and falls, or medical malpractice. However, they will not know the amount of coverage available.
Insurance carriers spend billions of dollars on advertising each year to make sure the public knows that insurance is available. And the media spends a lot of time covering discussions on the cost of medical care and health insurance.
Further, the majority of drivers carry liability insurance.
Some states even require car insurance. Those states that do not will ask for proof of financial responsibility before allowing you to operate a vehicle on the roadway legally.
The Insurance Research Council estimates that only about twelve percent of motorists are uninsured, though the numbers vary by state.
New York, New Jersey, Massachusetts, and Pennsylvania are among the states with the lowest percentage of uninsured motorists. Conversely, Michigan, Tennessee, Mississippi, and the District of Columbia have the highest percentage of uninsured drivers.
Some courts have used this knowledge to minimize the importance of Evidence Rule 411 and the potential prejudice when a jury learns that the defendant has liability insurance in a car crash or medical malpractice case. One court held:
However, too often courts have a Pavlovian response to insurance testimony – immediately assuming prejudice. It is naive to believe that today’s jurors, bombarded for years with information about health care insurance, do not already assume in a malpractice case that the defendant doctor is covered by insurance. The legal charade protecting juries from information they already know keeps hidden from them relevant information that could assist them in making their determinations. Our Rules of Evidence are designed with truth and fairness in mind; they do not require that courts should be blind to reality.
Given the sophistication of our juries, the first sentence of Evid. R. 411 (“[e]vidence that a person was or was not insured against liability is not admissible upon the issue [of] whether he acted negligently or otherwise wrongfully”) does not merit the enhanced importance it has been given. Instead of juries knowing the truth about the existence and extent of coverage, they are forced to make assumptions which may have more prejudicial effect than the truth.
Thus, the second sentence of Evid. R. 411, which allows courts to operate in a world free from truth-stifling legal fictions, ought to be embraced. In such instances as the case at hand, truth should win out over a naively inspired fear of prejudice.
Even though the jury may assume the defendant has liability insurance, do not inject the issue into the trial to prove negligence or wrongful conduct. Doing so may result in a mistrial or sanctions, or both.
Can Defendants Tell the Jury They Do Not Have Insurance?
No. A defendant cannot tell the judge or jury that they do not have liability insurance coverage.
A defendant’s statement implying they lack insurance coverage is similar to pleading poverty.
Courts consider these types of statements to be irrelevant and prejudicial because they can influence jurors into rendering verdicts based on compassion instead of the facts and law.
Can a Defendant Tell the Court that a Plaintiff Has Insurance?
No. A defendant cannot tell the court that you have insurance coverage that may pay for damages.
A defendant might want to influence jurors by telling them that you have insurance. There are two potential reasons for this: (1) to assist in a contributory negligence defense and (2) to show the jury that you will be “fine” financially if you lose the case or the jury awards fewer damages than you seek.
But doing so is not permitted under the evidence rules.
The advisory committee’s notes on Evidence Rule 411 state: “The rule is drafted in broad terms so as to include contributory negligence or other fault of a plaintiff as well as fault of a defendant.”
For example, the defendant cannot introduce evidence that you have received:
- Workers compensation benefits (including temporary total disability, permanent partial disability, lifetime medical coverage, or a workers comp settlement);
Admissibility for Other Purposes: When is Evidence of Insurance Admissible?
Evidence of insurance may be admissible if you offer it for a purpose other than showing negligence or wrongful conduct. And if the evidence is relevant and would not result in unfair prejudice to the defendant.
The evidence rules provide grounds for admission of evidence of liability insurance. This list, however, is not exhaustive. There are other potential uses of the existence or non-existence of liability insurance that may be admissible. And attorneys can be creative if they think this evidence will help their clients.
Let’s examine some potential reasons the court may admit evidence of insurance and even the amount of coverage.
Witness Bias (Especially Doctors, Expert Witnesses, and Claim Adjusters)
Many courts will allow evidence of liability insurance to show an economic tie between a witness and the insurance company.
For example, the Virginia Supreme Court has held that a plaintiff can use evidence of insurance coverage to cross-examine an expert witness on their bias when there is a substantial relationship between the expert and the insurer. It rejected a “direct relationship” standard.
In Graves v. Shoemaker, the trial court did not allow the plaintiff to cross-examine the defense medical expert about his relationship with the insurance company. The insurer had paid the doctor nearly $800,000 for work over seven years.
The trial court excluded this line of questioning because defense counsel retained the expert, not the insurer.
On appeal, the Supreme Court rejected the trial court’s ruling.
Instead, it held that an insurer’s payment of a considerable sum of money to an expert for past testimony favorable to its insured could be enough to establish a “substantial relationship” on its own. The receipt of a substantial amount by an expert can create a potential for bias that outweighs any potential harm from the mention of insurance to a defendant. And prejudice is for the jury to consider.
Other potential areas of bias to explore include:
- A claim adjuster who is employed by an insurance company with a financial interest in the case
- Coworkers or colleagues who testify to protect their company and blame another contractor in construction site accident cases
- Friendship or family relationship between a witness and the litigant
Ownership and Agency
If the defendant in a case arising from an auto accident, slip and fall on private property, or boat or airplane crash disputes ownership or control of the property or vehicle despite owning an insurance policy, evidence of liability insurance is usually admissible to prove ownership or control.
The rationale is that the person would not have purchased liability insurance unless they owned the property or vehicle.
The Defendant Opens the Door to the Evidence
If the defendant mentions their liability insurance during the trial, you might be able to introduce additional evidence of insurance because the defendant “opened the door” to admissibility.
How to Introduce Evidence of Liability Insurance Safely at Trial
A motion in limine is the safest way to know that you can introduce evidence of liability insurance at the trial without risking a mistrial or other sanction from the court.
Motions in limine are preliminary requests that a court allows or excludes specific evidence. The court can modify (or even reverse) its rulings during the trial.
Counsel for the defendants in a motor vehicle accident case will likely file a motion in limine to exclude evidence of insurance.
Suppose this evidence is vital to your case. If so, you should oppose the defendant’s motion and file a motion in limine of your own, asking the court to permit evidence of liability coverage and stating the purpose of the evidence.
The court may rule in your favor if you provide facts and law to support your position. You can then use the proof of liability insurance for limited purposes at trial (including voir dire, opening statements, direct and cross-examinations, and closing arguments).
Get Help with the Important Evidence Issues in Your Case
At trial, the rules of evidence often have as important a role in your case as the evidence itself.
Testimony and documents are helpful only if you can admit them into evidence at trial.
Call my firm if you have a question about your case: (804) 251-1620 or (757) 810-5614. We handle severe injury cases and want to help you.
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