Rule 411 usually prohibits plaintiffs from even mentioning insurance at trial – why?

Almost every defendant has insurance – unless they have substantial assets to pay a verdict, most defendants would not be in trial unless they had insurance.

Is it because jurors would return unfair, excessive damage awards if they knew that an insurance company was going to pay? Or is it because insurance companies know that jurors will return unfair, lower damage awards if they think a sympathetic defendant will be bankrupted by a high verdict?

Rule 411 – No Mention of Insurance to Prove Liability

Rule 411 of the SC Rules of Evidence prohibits plaintiffs from mentioning insurance to prove negligence:

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.

Rule 411 does not prohibit any mention of insurance at trial. Rather, it says that insurance “is not admissible upon the issue whether the person acted negligently or otherwise wrongfully.”

Despite this, insurance defense attorneys will argue that insurance should never be mentioned at trial as if it were a big secret that would irreparably harm their clients if jurors discovered the truth, and judges (many of whom have insurance defense backgrounds) often agree with them.

Like mentioning a polygraph in a criminal trial, the mere mention of insurance in a personal injury trial is taboo that may result in a mistrial if it is not brought to the court’s attention and argued beforehand.

Why Do We Hide Insurance from Juries?

Is Rule 411 necessary?

Why are insurance defense attorneys and the insurance companies they represent so terrified of jurors finding out that they are the true parties in interest?

The stated reason: If jurors know that a defendant has insurance, they will award higher damages because they will know that the insurance company is going to pay their verdict. Therefore, it is more prejudicial than probative.

People in general, and therefore jurors, hate insurance companies and might just punish the insurance company instead of awarding a verdict based on the evidence presented at trial.

The real reason: The insurance lobby spends huge amounts of money on politicians who then pass laws favorable to them – they spend money to influence lawmakers so they can save money that won’t be paid out in claims.

Jurors are not likely to award extra damages because they know a defendant has insurance. But the insurance industry knows that jurors are likely to award less damages if they think the nice mother of three, the struggling college student, or the kind doctor who made an innocent mistake will be bankrupted by their verdict.

It’s a lie by omission and fraud committed by the court, defense attorneys, and plaintiff’s attorneys on jurors, and the sole reason for it is to protect the bottom line for insurance companies.

Why We Should Tell Jurors About the Role of Insurance in Trials

Why should we tell jurors about the role of insurance?

It’s a fraud on jurors that allows insurance companies to use sympathy to argue for lower verdicts and that requires judges and attorneys to refuse to answer jurors’ questions about why they are in trial in the first place….

If that’s not enough, consider that, in most personal injury trials, the insurance company is a true party in interest. Plaintiffs not only need to talk about the insurance company, but the insurance company should be a named defendant at trial.

Imagine a kindly grandmother sitting at the defense table in a car crash trial with her defense attorneys arguing that she is not responsible for the crash or that she should not pay the “excessive” damages that the plaintiff claims to have suffered.

Who do the attorneys represent? They tell the jury that their client is the grandmother, and the ethics rules say that their client is the grandmother. But is it really?

When the plaintiff attempted to negotiate payment of their injury claim, did they call the kindly grandmother, or did they call the insurance company?

When the defense attorneys offered an unreasonably low settlement (or no settlement), did the grandmother tell them to do that? Or the insurance company?

When the defense attorneys take an offer of settlement to their client, do they call the grandmother, or do they call the insurance company?

Did the grandmother call the most expensive insurance defense firm to retain attorneys, or did the insurance company?

Why are they in trial in the first place? Is it because the grandmother refused to pay a valid claim, or is it because the insurance company refused to pay the claim? If the grandmother demands that the insurance company pay the claim because she knows it is valid, who will decide whether to pay, the grandmother or the insurance company?

If the insurance company refuses to pay the claim and the grandmother refuses to help them, what would happen then? Would her refusal to cooperate then invalidate her insurance contract? She has no choice but to cooperate or lose her insurance coverage

After the insurance company has refused to pay a valid claim and retained a high-priced defense firm to make sure they don’t have to pay a valid claim, should they be allowed to pretend like they are not there, and pretend as if it was the grandmother making those decisions?

Ordinary people can handle knowing who will pay their verdict, and they will 1) examine the evidence and 2) make a fair decision knowing that there is insurance. But the insurance company knows that, if some jurors think that a sympathetic defendant may be bankrupted by a verdict, they are more likely to return a lower verdict that is not full compensation.

The Exceptions – What Does Rule 411 Allow?

Insurance companies should be named as a party in interest, and their involvement should be made known to juries. That would take a change in the law that is not likely, given the insurance lobby’s influence on lawmakers and the courts.

The current Rule 411, however, does not prohibit any mention of insurance to juries – it “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.”

Although Rule 411 was adopted in 1995 to change the rule that insurance could not be mentioned at trial, it is often still interpreted strictly in favor of insurance companies. In cases where the role of insurance companies is offered to show a witness’s bias, however, it is admissible.

For example, where a defense witness testifies that the plaintiff is not entitled to damages or that they are entitled to low damages, the SC Supreme Court held, in Yoho v. Thompson, that their connection to the insurance industry is admissible to show bias:

A majority of jurisdictions addressing this issue apply a “substantial connection” analysis to determine whether an expert’s connection to a defendant’s insurer is sufficiently probative to outweigh the prejudice to the defendant resulting from the jury’s knowledge that the defendant carries liability insurance. See, e.g., Bonser v. Shainholtz, 3 P.3d 422 (Colo. 2000) (expert’s relationship with insurance Trust was admissible to show bias where expert was a co-founder and previous board member of Trust, and expert believed dentists insured by Trust were better quality than other dentists); Mills v. Grotheer, 957 P.2d 540 (Okla. 1998) (insufficient connection between expert and insurer to justify admission where expert was merely a policyholder).

We adopt the substantial connection analysis and conclude the connection between Dr. Brannon and Nationwide was sufficient to justify admitting evidence of their relationship to demonstrate Dr. Brannon’s possible bias in favor of Nationwide. Dr. Brannon was not merely being paid an expert’s fee in this matter. Instead, he maintained an employment relationship with Nationwide and other insurance companies. Dr. Brannon consulted for Nationwide in other cases and gave lectures to Nationwide’s agents and adjusters. Ten to twenty percent of Dr. Brannon’s practice consisted of reviewing records for insurance companies, including Nationwide. Further, Dr. Brannon’s yearly salary was based in part on his insurance consulting work. The trial court erred in refusing to allow Yoho to cross-examine Dr. Brannon about his relationship with Nationwide.

In a later case, Todd v. Joyner, the SC Supreme Court found that, where the defense expert was only paid an expert fee as opposed to having an employment relationship with the insurance company, there was an insufficient connection to allow cross-examination on their relationship with the insurance company.

The Court noted that in Yoho, where the insurance relationship was admissible to show bias, there was a substantial connection between witness and insurance company because:

(1) [] the expert was not merely paid an expert fee in the case but instead maintained an employment relationship with the insurance company and other insurance companies; (2) the expert consulted for the insurance company and gave lectures to its agents and adjusters; (3) 10-20% of the expert’s practice consisted of reviewing records for insurance companies; and (4) the expert’s yearly salary was based in part on his insurance consulting work.

The fact that an insurance company is a real party in interest should be admissible in every personal injury case. Under current SC law, however, evidence of insurance 1) is not admissible to prove liability, but 2) is admissible to prove “agency, ownership, or control, or bias or prejudice of a witness.”

Pay no attention to that man behind the curtain…

Personal Injury Lawyers in Charleston, SC

The Charleston personal injury attorneys at the Boles Law Firm can help you to determine liability, gather the evidence you will need in court, negotiate with the insurance companies, and recover the maximum compensation that you are entitled to for your injuries.

Call us at 843-576-5775 to schedule an appointment for a free consultation at our North Charleston or Walterboro offices or send us a message through our website.

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