Public Policy Doctrines For The Exclusion of Relevant Evidence - Ownership of Liability Insurance

Ownership of Liability Insurance

Evidence of a party's ownership of—or lack of ownership of—liability insurance is inadmissible to prove (1) negligence or (2) wrongful conduct because courts do not want to discourage parties from carrying such insurance. FRE 411 states:

Evidence that a person was or was not insured against liability is not admissible upon the issue whether the person acted negligently or otherwise wrongfully. This rule does not require the exclusion of evidence of insurance against liability when offered for another purpose, such as proof of agency, ownership, or control, or bias or prejudice of a witness.

The rule spells out four exceptions to the rule of inadmissibility: evidence of a party's ownership of liability insurance—or of a party's failure to own liability insurance—is admissible to prove (1) a witness' bias or prejudice, i.e. for witness impeachment; (2) agency; (3) ownership; and (4) control.

1. If the owner of the insurance policy disputes ownership or control of the property, for instance, evidence of liability insurance can be introduced to show that it is likely that the owner of the policy probably does own or control the property.
2. If a witness has an interest in the policy that gives the witness a motive or bias with respect to specific testimony, the existence of the policy can be introduced to show this motive or bias. Federal rules of civil procedure rule 26 was amended in 1993 to require that any insurance policy that may pay or may reimburse be made available for photocopying by the opposing litigants, although the policies are not normally information given to the jury. Federal Rules of Appellate Procedure rule 46 says that an appeal can be dismissed or affirmed if counsel does not update their notice of appearance to acknowledge insurance. The Cornell University Legal Institute web site includes congressional notes.

Additionally, an exception arises where the party's mention of its own liability insurance is inextricably intertwined with another statement that is admissible. For example, if after an automobile accident, the driver of one car runs over to the other and says "don't worry, my insurance will pay to fix the damage I caused to your car", the entire statement is admissible not to show that the driver is insured, but that the driver has admitted fault.

• Note that in California, California Evidence Code ("CEC") §1155 provides that evidence of a party's whole or part ownership of liability insurance is inadmissible to prove (1) negligence or (2) other wrongdoing. The statute does not include total lack of ownership of liability insurance, which may thus be used to prove that defendant did not exercise due care.