Learning Outcomes
After reading this article, you will be able to identify when evidence of insurance coverage is inadmissible or admissible in civil and criminal cases, explain the policy reasons for these exclusions, and apply the rules to MBE-style questions. You will also understand how insurance coverage relates to the admissibility of evidence for proving negligence, fault, or other issues, and recognize the exceptions to these exclusions.
MBE Syllabus
For the MBE, you are required to understand the rules and policy exclusions relating to insurance coverage evidence. This includes knowing when evidence of insurance is inadmissible, the rationale behind these exclusions, and the exceptions that allow such evidence. You should be prepared to:
- Recognize when evidence of liability insurance is excluded to prove negligence or wrongful conduct.
- Identify exceptions where insurance evidence is admissible (e.g., to show ownership, control, or bias).
- Apply the policy reasons for these exclusions in evidence questions.
- Distinguish between the use of insurance evidence in civil and criminal cases.
- Analyze MBE questions involving insurance coverage and related 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.
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In a negligence action, evidence that the defendant carried liability insurance is:
- Always admissible to prove negligence.
- Inadmissible to prove negligence, but may be admissible for another purpose.
- Always inadmissible for any purpose.
- Admissible only if the defendant testifies.
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Evidence of liability insurance may be admitted to show:
- The defendant acted negligently.
- The defendant could afford to pay a judgment.
- The defendant owned or controlled the property where the injury occurred.
- The plaintiff suffered actual damages.
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Which of the following is a primary policy reason for excluding evidence of insurance coverage?
- To prevent unfair prejudice and encourage responsible behavior.
- To ensure all relevant facts are before the jury.
- To allow the jury to consider the defendant’s financial status.
- To punish defendants who lack insurance.
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.
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.
Key Term: Liability Insurance Insurance that covers a party for losses resulting from claims of negligence or wrongful conduct, often at issue in tort or contract disputes.
The main policy reason for this exclusion is to prevent the jury from being influenced by the existence or absence of insurance, which could lead to unfair prejudice. Jurors might assume a defendant with insurance can afford a judgment, or that a lack of insurance means the defendant is less likely to be at fault.
Key Term: Policy Exclusion A rule that excludes certain evidence from trial, not because it is irrelevant, but because its admission would violate important public policy considerations.
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 (e.g., if a witness works for an insurance company involved in the case).
- Demonstrating agency, if the existence of insurance is relevant to that relationship.
Key Term: Ownership or Control The legal right to possess or manage property, which may be established by evidence of insurance coverage when disputed in litigation.
Key Term: Bias A tendency or inclination that affects a witness's credibility, such as a financial interest in the outcome of the case.
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. This prevents the jury from making improper inferences about fault or financial responsibility.
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.
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.
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.
Exam Warning
Evidence of insurance coverage is never admissible solely to show that a party acted negligently or could afford to pay a judgment. Introducing such evidence for that purpose is grounds for exclusion and may result in a mistrial.
Revision Tip
If insurance evidence is admitted for a limited purpose, request a limiting instruction to ensure the jury considers it only for that purpose.
Summary
Evidence of liability insurance is generally excluded to prevent unfair prejudice and encourage responsible conduct. However, such evidence may be admitted for other relevant purposes, such as proving ownership, control, or bias. Understanding the policy reasons and exceptions is essential for answering MBE questions on this topic.
Key Point Checklist
This article has covered the following key knowledge points:
- Evidence of liability insurance is inadmissible to prove negligence or wrongful conduct.
- The main policy reason is to prevent unfair prejudice and encourage parties to obtain insurance.
- Insurance evidence may be admitted to show ownership, control, or bias if relevant.
- Admissibility for a limited purpose may require a limiting instruction to the jury.
- Insurance coverage cannot be used to show a party could pay a judgment.
Key Terms and Concepts
- Liability Insurance
- Policy Exclusion
- Ownership or Control
- Bias
