PastPaperHero | Privileges and other policy exclusions

Learning Outcomes

This article explains how liability insurance and related policy exclusions operate under the rules of evidence for MBE purposes, including:

Identifying when evidence that a party is insured or uninsured is inadmissible to prove negligence, fault, carefulness, or ability to pay a judgment.
Recognizing the specific, non-fault purposes for which liability insurance evidence may be admitted, such as proving ownership, control, agency, or witness bias.
Understanding how public policy concerns—especially unfair prejudice, jury misuse, and the desire to encourage insurance—justify excluding otherwise relevant insurance evidence.
Distinguishing liability insurance from first-party and other insurance products, and knowing how that classification changes the governing evidentiary rules.
Applying Rule 411 together with Rule 403 balancing, limiting instructions, and redaction to manage mixed-purpose statements and minimize prejudice.
Analyzing how courts treat incidental or accidental references to insurance, including curative instructions and mistrial motions.
Using these principles to evaluate MBE-style fact patterns in both civil and criminal cases, particularly when insurance evidence overlaps with other policy-based exclusions such as subsequent remedial measures or settlement negotiations.

MBE Syllabus

For the MBE, you are required to understand the rules and policy exclusions relating to insurance coverage evidence, with a focus on the following syllabus points:

Recognition that evidence of liability insurance (or its absence) is generally inadmissible to prove negligence or other wrongful conduct.
Identification of permissible, non-fault uses of insurance evidence, such as proving ownership, control, agency, or witness bias.
Understanding of the policy reasons behind the exclusion of liability insurance evidence, including concerns about unfair prejudice and discouraging responsible behavior.
Ability to distinguish liability insurance from other insurance (e.g., life or property insurance) and apply different evidentiary rules accordingly.
Application of limiting instructions and Rule 403 balancing when insurance evidence is admitted for limited purposes.
Distinguishing between the treatment of insurance-related evidence in civil and criminal cases on the MBE.
Recognizing how insurance evidence can interact with other rules (hearsay, impeachment, relevance, and other policy exclusions).

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

In a negligence action, evidence that the defendant carried liability insurance is:
1. Always admissible to prove negligence.
2. Inadmissible to prove negligence, but may be admissible for another purpose.
3. Always inadmissible for any purpose.
4. Admissible only if the defendant testifies.
Evidence of liability insurance may be admitted to show:
1. The defendant acted negligently.
2. The defendant could afford to pay a judgment.
3. The defendant owned or controlled the property where the injury occurred.
4. The plaintiff suffered actual damages.
Which of the following is a primary policy reason for excluding evidence of insurance coverage?
1. To prevent unfair prejudice and encourage responsible behavior.
2. To ensure all relevant facts are before the jury.
3. To allow the jury to consider the defendant’s financial status.
4. To punish defendants who lack insurance.
In a personal injury trial, the plaintiff offers evidence that the defendant has no liability insurance to argue that the defendant must be very careful. The evidence is:
1. Admissible to show the defendant’s careful character.
2. Admissible to show the defendant cannot afford a judgment.
3. Inadmissible because it is offered to show carefulness.
4. Admissible only if the defendant denies negligence.
In an arson prosecution, the prosecutor offers evidence that the defendant landlord recently doubled the fire insurance on the building that burned. The defense objects under Rule 411. The court should:
1. Exclude the evidence under Rule 411.
2. Admit the evidence because Rule 411 does not apply to this type of insurance.
3. Exclude the evidence because insurance is never admissible in criminal cases.
4. Admit the evidence only to prove negligence, not motive.

Introduction

Evidence of insurance coverage is often excluded from trial to prevent unfair prejudice and to encourage parties to obtain insurance without fear that it will be used against them. The Federal Rules of Evidence and similar state rules generally prohibit the introduction of liability insurance evidence to prove negligence or wrongful conduct, but allow it for other purposes such as showing ownership, control, or bias. Understanding these rules and their exceptions is essential for the MBE.

The controlling rule in federal court is Federal Rule of Evidence 411. It provides that evidence a person was or was not insured against liability is not admissible to prove whether the person acted negligently or otherwise wrongfully. It also expressly allows such evidence when offered for another purpose, such as proving agency, ownership, or control, or to show witness bias or prejudice.

Key Term: Liability Insurance
Insurance that indemnifies an insured against claims made by others for losses arising out of the insured’s alleged negligence or other wrongful conduct (e.g., auto liability, homeowners liability, malpractice coverage).

Key Term: Policy Exclusion
An evidentiary rule that excludes certain otherwise relevant evidence because admitting it would conflict with important public policy interests, such as avoiding unfair prejudice or encouraging socially desirable behavior.

FRE 411 is one of several policy-based exclusions in the relevance group of rules. Others include the exclusions for subsequent remedial measures, settlement offers and negotiations, and offers to pay medical expenses. All of these rules share a common structure:

They assume the evidence is logically relevant.
They nevertheless exclude it for certain purposes because of strong policy concerns.
They generally permit the same evidence for some other, non-prohibited purpose.

Key Term: Policy-Based Exclusion
A rule that bars logically relevant evidence for designated purposes in order to advance a policy (e.g., encouraging repairs, settlements, or buying insurance), while often allowing that evidence for other purposes.

Policy Exclusion: Liability Insurance

Evidence that a party was or was not insured against liability is generally inadmissible to prove that the party acted negligently or wrongfully. This exclusion applies in both civil and criminal cases whenever the proponent offers the insurance evidence to show fault or a propensity to behave carelessly.

This rule covers both sides of the coin:

A plaintiff may not argue, “The defendant has plenty of insurance, so you should find him negligent.”
A defendant may not argue, “I have no insurance; that shows I’m careful and would never act negligently.”

The rule also bars using insurance evidence to suggest that a defendant can afford to pay a judgment. Evidence of wealth or poverty is usually excluded because of the risk that a jury will decide based on ability to pay rather than on the merits.

Key Term: Unfair Prejudice
The risk that evidence will lead the jury to decide on an improper basis—such as emotion, wealth, or sympathy—rather than on the facts and governing law.

The main policy reasons for the exclusion are:

To prevent jurors from being influenced by the existence or absence of insurance, which might distort their view of liability or damages.
To avoid discouraging people from obtaining liability insurance out of fear that jurors will punish insured parties more readily.
To keep the focus on whether the defendant’s conduct met the applicable standard of care, not on who will ultimately pay.
To avoid turning trials into mini-disputes about insurance policy terms and coverage, which could confuse jurors and waste time.

The exclusion is policy-based, not relevance-based. Insurance coverage is often logically relevant: jurors might reasonably infer that a business that insures property likely owns or controls it. But the rules deliberately sacrifice some logically relevant evidence to serve broader policy goals.

Key Term: Absence of Insurance
Evidence that a party does not carry liability insurance; treated the same as evidence of insurance—generally inadmissible to prove fault, carefulness, or inability to pay a judgment.

Importantly, under Rule 411, absence of insurance cannot be used to show that a person is careful or risk-averse any more than the presence of insurance can be used to show that a person is careless or reckless. Both uses draw the kind of character-based inference the rule forbids.

Scope of the Rule: What Counts as “Evidence of Insurance”

For MBE purposes, assume the rule covers:

Direct references to insurance policies (e.g., “The defendant’s liability policy has a $1 million limit”).
Testimony that an insurer will pay the judgment.
References to the involvement of an insurer when used to imply coverage and ability to pay (e.g., “The defendant’s insurer already made me a settlement offer”).
Internal documents or correspondence explicitly describing liability coverage (e.g., “We opened a claim on your general liability policy”).

Courts will often distinguish between:

Evidence offered primarily to show insurance (covered by the exclusion), and
Evidence where insurance is collateral to some other, legitimate purpose.

If the reference to insurance is incidental and can be redacted or cured with a limiting instruction, the court may allow the remaining non-insurance portion.

Key Term: Limited Admissibility
Admission of evidence for one specific, permissible purpose, while instructing the jury not to consider it for other, impermissible purposes (governed by Federal Rule of Evidence 105).

Key Term: Limiting Instruction
A judicial direction to the jury that evidence may be considered only for a specific, allowed purpose and must not be used for any forbidden purpose.

Accidental references to insurance sometimes occur at trial (for example, a witness blurts out, “The insurance company told me to come here”). In such situations:

The judge will often strike the remark,
Immediately instruct the jury to disregard the reference, and
Deny a motion for mistrial unless the prejudice is extreme or repeated.

On the MBE, if a fact pattern shows a single, unsolicited mention of insurance followed by a curative instruction, assume the trial judge acts within discretion by denying a mistrial.

Key Term: Mistrial
A termination of a trial before verdict due to serious error or prejudice that cannot be cured by instructions or other measures.

Liability Insurance vs. Other Types of Insurance

Rule 411 applies only to liability insurance—coverage against claims by third parties alleging negligence or other wrongful conduct.

It does not apply to other major categories:

Property or casualty insurance on one’s own property (e.g., fire insurance on a building).
Life insurance (including policies taken out on a spouse or business partner).
Health or disability insurance.
Accident or travel insurance that pays the insured directly.

Key Term: First-Party Insurance
Insurance that pays benefits directly to the insured for the insured’s own losses (e.g., fire insurance, health insurance, life insurance), as opposed to indemnifying the insured against liability to others.

Because Rule 411 is limited to liability policies, evidence of first-party insurance is analyzed under ordinary relevance and Rule 403 balancing, not under the specific prohibition of Rule 411. For example:

In a homicide case, evidence that the defendant recently took out a large life insurance policy on the victim can be highly probative of motive and is generally admissible (subject to Rule 403).
In an arson case, evidence that the owner recently increased fire insurance on a building can show motive to commit arson.

Note, however, that other doctrines may still restrict insurance evidence even when Rule 411 does not apply. For instance, tort law’s collateral source rule (a substantive rule, not an evidentiary rule) often prevents a defendant from reducing damages by showing that the plaintiff’s losses were covered by health insurance. On the MBE Evidence questions, focus on Rule 411 and Rule 403 rather than collateral source details.

Relationship to Other Policy Exclusions

Liability insurance is one of several public policy exclusions in the Evidence syllabus. Others include:

Subsequent remedial measures (FRE 407).
Settlement offers and negotiations (FRE 408).
Offers to pay medical and similar expenses (FRE 409).

All of these rules:

Presume basic relevance.
Exclude certain uses (usually to prove fault, liability, or the amount of a claim).
Preserve admissibility for other, specifically permitted purposes (e.g., proving ownership or bias, impeaching a witness, or showing feasibility of safety measures).

For example, like Rule 411, Rule 407 bars using repairs or changes made after an accident to prove negligence, culpable conduct, product defect, or inadequate warning, but allows such evidence to show ownership, control, or feasibility of safety measures if those issues are contested.

On the MBE, fact patterns sometimes combine multiple policy exclusions. Your task is to identify:

Which rule (or rules) apply, and
For what specific purpose the evidence is being offered.

Exceptions: When Insurance Evidence Is Admissible

Despite the general exclusion, evidence of insurance coverage may be admissible for other relevant purposes, such as:

Proving ownership or control of property, if disputed.
Showing bias or prejudice of a witness (for example, employment by or financial dependence on the insurer).
Demonstrating an agency relationship, if the existence of insurance tends to show who employs whom or who is responsible for a driver or employee.
Impeaching a witness who has given misleading testimony about insurance or carefulness.
Explaining a party’s conduct (for example, why a party reported an accident promptly).

The list in Rule 411 is illustrative, not exhaustive. Any use of insurance evidence that does not rely on the forbidden inference (“insured, therefore negligent” or “uninsured, therefore careful”) can potentially be allowed, subject to Rule 403 balancing.

Key Term: Ownership or Control
The legal right to possess, manage, or direct the use of property. An insurance policy listing a party as the insured on specific premises can be evidence that the party owns or controls those premises.

Key Term: Bias
A tendency or inclination, often based on financial or personal interest, that may affect a witness’s credibility or reliability.

Key Term: Agency
A legal relationship in which one person (the agent) acts on behalf of and under the control of another (the principal); evidence of who purchased or is named on an insurance policy can be relevant to prove that relationship.

Key Term: Vicarious Liability
Liability imposed on one party (often an employer or principal) for the wrongful acts of another (such as an employee or agent), usually based on an agency or employment relationship.

When insurance evidence is offered for a permissible purpose, courts then apply Rule 403 to decide whether to admit it.

Key Term: Rule 403 Balancing
The process by which a court excludes otherwise relevant evidence if its probative value is substantially outweighed by dangers such as unfair prejudice, confusion, or waste of time.

If the non-fault purpose is genuinely important and disputed (e.g., who owned the property where the accident occurred), the probative value of the insurance evidence is usually high and will outweigh the risk of unfair prejudice.
If the non-fault fact is already conceded or can be proven by less prejudicial evidence, the marginal value of the insurance evidence is low, and the court may exclude it under Rule 403.

On the MBE, if ownership, control, or agency is not disputed, a court is likely to exclude insurance evidence offered for that ostensible purpose, because its main effect would be to alert the jury that a defendant has coverage.

Inadmissibility to Prove Negligence or Wrongdoing

The rules specifically prohibit using insurance coverage to show that a party acted negligently, wrongfully, or could afford to pay a judgment. Common improper uses include:

Plaintiff arguing: “The defendant is fully insured, so you should not hesitate to hold him liable.”
Defendant arguing: “I would never be careless; I do not even carry insurance.”
Plaintiff offering policy limits to influence the size of the damages award.
Prosecutor arguing: “The defendant had large liability coverage, so he must have expected an accident and acted recklessly.”

Insurance evidence used in these ways invites the jury to decide based on financial considerations rather than on whether the elements of the claim or defense have been proven. On the MBE, answer choices that mention insurance as proof of negligence, fault, carefulness, or ability to pay are almost always incorrect.

Remember that exclusion of insurance evidence is separate from other relevance rules:

Even if a statement about insurance is a party admission (and so not hearsay), Rule 411 still bars it if offered to prove fault.
Even if a policy falls within the business records exception, Rule 411 can independently exclude it when used to show negligence.
Even if a statement about insurance is relevant to damages (e.g., showing ability to pay), Rule 411 and Rule 403 together keep that issue away from the jury.

Key Term: Party-Opponent Statement
A statement made by a party and offered against that party; under the Federal Rules it is defined as “not hearsay” and is generally admissible if relevant, unless some other rule (such as Rule 411) excludes it.

Admissibility for Other Purposes

If insurance evidence is offered for a permissible purpose, such as to prove ownership or bias, it may be admitted. However, the court may give a limiting instruction to ensure the jury considers the evidence only for the allowed purpose and not for fault.

Typical permissible uses:

Ownership or control:
- A store denies owning the premises where the accident occurred; a liability policy listing the store as the insured on that property is offered to prove ownership or control.
Agency / employment:
- A company denies that a driver was its employee; the driver is covered under the company’s fleet liability policy, suggesting an agency relationship and possible vicarious liability.
Bias:
- A witness works for the defendant’s insurer or is a claims adjuster with a stake in minimizing payouts; this may show an incentive to favor the insured.

Key Term: Motive Evidence
Evidence offered to show why a person might have acted in a particular way (e.g., financial gain), rather than to show that the person has a careless character.

Importantly, Rule 411 applies only to liability insurance. Other types of insurance—such as property or life insurance—are not covered by Rule 411 and may be admissible, for example, to show motive in an arson or homicide case.

Beyond ownership, agency, and bias, some additional permissible uses include:

Explaining conduct: Evidence that a defendant promptly notified an insurer may be relevant to explain why the defendant gathered certain documents or took certain steps, as long as it is not offered to show negligence.
Impeachment by contradiction: If a witness testifies in an exaggerated way about safety practices or lack of insurance, contrary insurance evidence can be admitted to contradict that testimony.
Rebutting an argument of financial hardship: If a defendant improperly suggests inability to pay damages, a court might allow limited insurance evidence to correct a misleading impression, though this is delicate and rarely appears on the MBE.

Civil vs. Criminal Cases

Although most questions arise in civil negligence actions, Rule 411 is not limited to civil cases. It bars using liability insurance to prove that someone acted “negligently or otherwise wrongfully” in any context, including:

A criminal prosecution where the state wants to argue, “The defendant had liability insurance, so he must have expected an accident and acted recklessly.”
A criminal case where the defendant wants to show that lack of insurance proves he is cautious and unlikely to have committed the offense.
A reckless driving prosecution where the prosecutor wants to show that the defendant increased her auto liability limits before an illegal race to suggest premeditation.

However, in criminal cases involving first-party insurance (e.g., fire insurance on property or life insurance on a victim), Rule 411 does not apply, and insurance may be relevant to show motive (e.g., motive to burn a building or kill a spouse to collect insurance).

Examples:

Arson: The state introduces evidence that the defendant landlord recently doubled the fire insurance on the building that burned. The evidence is offered to show a financial motive to burn the building. Because this is first-party property insurance, Rule 411 does not bar it. The real question is Rule 403—does probative value outweigh any risk of unfair prejudice? Typically it does, so the evidence is admissible.
Homicide: The prosecution offers evidence that the defendant took out a large life insurance policy on his spouse shortly before the spouse was killed. Again, Rule 411 does not apply; the evidence comes in as motive evidence, subject to Rule 403.

In both civil and criminal cases, always ask:

What type of insurance is involved?
For what purpose is it being offered?
Does Rule 411 apply, and if not, do ordinary relevance and Rule 403 still allow or exclude the evidence?

Procedural Handling: Motions and Redactions

Insurance issues often arise through motions in limine and through redaction of statements.

Key Term: Motion in Limine
A pretrial motion asking the court to admit or exclude certain evidence before it is offered at trial, often used for issues likely to cause prejudice (such as insurance).

Parties commonly file a motion in limine to prevent the other side from mentioning insurance in front of the jury. If the judge grants the motion, any later mention of insurance risks a sustained objection, a curative instruction, or in extreme cases, a mistrial.

Statements that combine admissions of fault with references to insurance usually must be split:

The admission of fault portion is admissible as a party-opponent statement.
The reference to insurance is excluded under Rule 411 (unless offered for a permissible purpose), often by redaction.

Courts prefer redaction or limiting instructions over blanket exclusion when a single statement contains both admissible and inadmissible components.

Worked Example 1.1

A plaintiff sues a store for injuries suffered after slipping on a wet floor. The plaintiff wants to introduce evidence that the store had liability insurance covering slip-and-fall accidents. The store denies owning the premises.

Question: Is the insurance evidence admissible?

Answer:
The evidence is inadmissible to prove the store was negligent, but may be admissible to show the store owned or controlled the premises if that fact is disputed. The court should give a limiting instruction directing the jury to consider the insurance only on the issue of ownership or control, not as proof of negligence or ability to pay. If the store had already conceded ownership, the court would likely exclude the policy entirely as unfairly prejudicial under Rule 403.

Worked Example 1.2

During trial, a witness for the defendant testifies that the defendant is always careful. On cross-examination, the plaintiff asks if the witness is employed by the defendant’s insurance company.

Question: Is this question proper?

Answer:
Yes. Evidence of insurance may be admitted to show the witness’s bias, since employment by the insurer could affect the witness’s credibility. The evidence is not being used to show that the defendant acted negligently; it is being used solely to impeach the witness’s neutrality. A limiting instruction is appropriate, telling the jury to consider the insurance only in evaluating the witness’s credibility, not as proof of fault or ability to pay.

Worked Example 1.3

In a negligence action, the defendant testifies, “I have never carried liability insurance because I am extremely careful and do not need it.” The plaintiff seeks to introduce evidence that the defendant actually has a liability policy.

Question: Is this evidence admissible?

Answer:
Yes, for impeachment. Ordinarily, insurance is inadmissible to prove negligence, but here the defendant opened the door by lying about coverage to bolster his character for carefulness. The insurance evidence is admissible to contradict his testimony and attack his credibility, not to show he was negligent in this incident. A limiting instruction is appropriate, and the court may also note that the defendant’s misleading statement diminished any unfair prejudice from revealing insurance.

Worked Example 1.4

A delivery driver injures a pedestrian. The company that owns the truck denies that the driver was its employee. The plaintiff offers the company’s liability policy, which lists the driver as a covered employee.

Question: Is the insurance policy admissible?

Answer:
Yes, to show agency or employment. The policy tends to prove that the company considered the driver its employee or agent for purposes of liability coverage, supporting vicarious liability. It cannot be used to show that the company was negligent, but it is admissible for the limited purpose of establishing the agency relationship. The judge should give a limiting instruction and may redact irrelevant policy details (such as policy limits) to reduce the risk of prejudice.

Worked Example 1.5

In an arson prosecution, the state offers evidence that the building owner had recently increased fire insurance on the property. The defense objects, citing the rule on liability insurance.

Question: Should the objection be sustained?

Answer:
No. Rule 411 applies only to liability insurance—insurance against claims by others. Fire insurance on one’s own property is first-party insurance, not liability insurance. The evidence is offered to show motive (financial gain), not to prove negligent or wrongful conduct based on coverage. It is admissible, subject to Rule 403 balancing. Unless the risk of unfair prejudice substantially outweighs its probative value, the court should admit it.

Worked Example 1.6

In a slip-and-fall case, the plaintiff testifies, “Right after I fell, the store manager said, ‘Don’t worry, my insurance will take care of everything; it was our fault.’” The plaintiff offers the statement.

Question: How should the court handle this statement?

Answer:
The portion admitting fault (“it was our fault”) is an admissible party-opponent statement. The reference to insurance (“my insurance will take care of everything”) is inadmissible if offered to prove negligence or ability to pay under Rule 411. The court should either redact the insurance reference before the jury hears the statement or instruct the jury that it may consider the statement only as an admission of fault and must disregard the mention of insurance when deciding liability or damages.

Worked Example 1.7

In a negligence case, the plaintiff offers evidence that the defendant’s liability policy has a $500,000 limit to show that the defendant can afford any judgment up to that amount.

Question: Is this evidence admissible?

Answer:
No. Insurance limits are inadmissible when used to suggest the defendant can afford to pay. Rule 411’s policy goal is to prevent jurors from deciding based on the availability of insurance. The evidence has no permissible non-fault purpose in this context and should be excluded. The same result would follow even if the plaintiff framed the argument as “Do not worry about overcompensating the plaintiff—insurance will cover it.”

Worked Example 1.8

A landowner denies owning a vacant lot where a child was injured. The plaintiff offers the landowner’s liability policy, which covers the vacant lot, solely to prove ownership. The defense argues that the jury will inevitably infer that the landowner can afford to pay.

Question: How should the court rule?

Answer:
The evidence should be admitted for the limited purpose of proving ownership, with a limiting instruction. Ownership is a material, disputed issue; the policy directly supports the plaintiff’s position by listing the landowner as the insured on that specific lot. The risk of unfair prejudice can be mitigated by instructing the jury not to use the insurance evidence as proof of negligence or ability to pay. If there were other equally strong, non-prejudicial evidence of ownership, the judge could consider excluding the policy under Rule 403, but here the policy appears to be uniquely probative.

Worked Example 1.9

In a car-accident case, the plaintiff testifies: “During settlement talks, the defendant’s insurance adjuster said, ‘We know our driver was at fault, and the company will pay your medical bills.’” The plaintiff offers this testimony at trial to prove the defendant driver’s negligence.

Question: How should the court analyze this statement?

Answer:
Multiple rules apply. First, the statement occurred during settlement negotiations, so under Rule 408, it is generally inadmissible to prove liability or the amount of a claim. Second, the reference to payment by the “company” and the role of the “insurance adjuster” triggers Rule 411; insurance coverage cannot be used to prove negligence or ability to pay. Even though “we know our driver was at fault” looks like an admission, it is wrapped inside a settlement negotiation and connected to insurance payment. The court should exclude the entire statement when offered to prove negligence. On an MBE question, a choice that admits this as a party admission would be incorrect because it ignores both Rule 408 and Rule 411.

Worked Example 1.10

In a reckless driving prosecution, the prosecutor offers evidence that the defendant had recently increased his auto liability insurance limits shortly before participating in an illegal street race that injured a pedestrian. The prosecutor argues this shows that the defendant anticipated an accident and thus acted recklessly.

Question: Is the insurance evidence admissible?

Answer:
No. This is a criminal case, but Rule 411 still applies because the evidence is liability insurance offered to prove wrongful conduct. The prosecutor’s theory is that higher limits make it more likely the defendant engaged in dangerous behavior. This is precisely the inference Rule 411 forbids (“insured, therefore careless or reckless”). The evidence should be excluded under Rule 411 and, independently, under Rule 403 due to the high risk that the jury will base its decision on the presence of insurance rather than the elements of the offense.

Exam Techniques and Common MBE Traps

Several recurring patterns appear in MBE questions about insurance:

Insurance as character evidence: Watch for answer choices that treat having insurance (or not) as evidence of carefulness or carelessness. Those options conflict with Rule 411.
Insurance to prove wealth or poverty: Using policy limits or absence of coverage to suggest ability or inability to pay is improper and should be rejected.
Mixed-purpose evidence: When insurance evidence is combined with admissible content (like admissions of fault or motive), separate what is allowed from what Rule 411 excludes.
Ownership or agency not genuinely disputed: If the fact pattern makes clear that the defendant has conceded ownership or control, answer choices that admit insurance to prove those facts usually fail Rule 403 balancing.
Confusing first-party and liability insurance: Always classify the insurance. If it pays the insured for their own property or life interest, 411 does not apply; if it protects against liability to others, 411 does.
Combination with other rules: Insurance evidence may appear together with settlement negotiations (Rule 408) or subsequent repairs (Rule 407). Consider each rule separately; sometimes more than one exclusion applies.

Exam Warning

Evidence of insurance coverage is never admissible solely to show that a party acted negligently, wrongfully, or could afford to pay a judgment. Attempting to introduce such evidence for these purposes is grounds for exclusion and, in extreme cases, can lead to a mistrial. On the MBE, any answer that endorses insurance evidence as proof of negligence, carefulness, or ability to pay should be viewed with suspicion.

Revision Tip

When insurance evidence appears in a fact pattern, ask two questions:

What is the proponent trying to prove with the insurance evidence? If the answer is “negligence,” “wrongdoing,” “carefulness,” or “ability to pay,” the evidence is inadmissible under Rule 411 (and likely Rule 403).

Is there another legitimate purpose (ownership, control, agency, bias, motive, impeachment)? If so, the evidence may come in with a limiting instruction, assuming its probative value is not substantially outweighed by unfair prejudice.

Summary

Evidence of liability insurance is generally excluded to prevent unfair prejudice and encourage responsible conduct. Rule 411 bars using liability insurance (or its absence) to prove negligence, wrongful conduct, carefulness, or ability to pay. However, such evidence may be admitted for other relevant purposes, such as proving ownership, control, agency, or bias, or—when dealing with non-liability insurance—showing motive.

The rule is not about irrelevance but about policy. Insurance often has real probative value, but the Federal Rules intentionally limit how juries may use that information. When insurance evidence is offered for a permissible purpose, courts rely on Rule 403 balancing and limiting instructions to manage the residual risk that jurors will misuse the evidence.

On the MBE, insurance questions often turn on spotting the purpose for which the evidence is offered, properly classifying the type of insurance involved, and recognizing when a limiting instruction is required. Distinguish liability insurance (covered by Rule 411) from other forms of insurance (e.g., fire or life insurance) that may be used to show motive. Recognizing overlaps with other policy exclusions (subsequent remedial measures and settlement negotiations) is also essential.

Key Point Checklist

This article has covered the following key knowledge points:

Evidence that a person was or was not insured against liability is inadmissible to prove negligence, wrongful conduct, carefulness, or ability to pay a judgment.
The exclusion is grounded in public policy, particularly the desire to prevent unfair prejudice and to encourage parties to obtain liability insurance.
The rule applies in both civil and criminal cases whenever liability insurance is offered to suggest fault or carefulness.
Rule 411 is a policy-based exclusion: it assumes insurance evidence can be relevant but excludes it for certain purposes while allowing it for others.
Liability insurance is distinct from first-party insurance (e.g., property or life insurance), which is not covered by Rule 411 and may be admissible, often to show motive.
Insurance evidence may be admitted for other relevant purposes, such as proving ownership, control, agency, vicarious liability, or witness bias, or for impeachment.
When insurance evidence is admitted for a limited purpose, the court should provide a limiting instruction to confine the jury’s use of that evidence.
Rule 403 balancing is central: even when insurance evidence is offered for a permissible purpose, the court must decide whether its probative value outweighs the risk of unfair prejudice.
Attempts to use policy limits or lack of insurance to influence the size of a verdict, or to prove carefulness or carelessness, are improper and should be rejected on the exam.
Insurance issues often overlap with other rules such as settlement negotiations (Rule 408), subsequent remedial measures (Rule 407), hearsay, and impeachment; each rule must be considered separately.

Key Terms and Concepts

Liability Insurance
Policy Exclusion
Policy-Based Exclusion
Ownership or Control
Bias
Agency
Vicarious Liability
Unfair Prejudice
Absence of Insurance
Limited Admissibility
Limiting Instruction
First-Party Insurance
Rule 403 Balancing
Party-Opponent Statement
Motion in Limine
Motive Evidence
Mistrial

Privileges and other policy exclusions - Insurance coverage