In Indiana, as well as many other states, the coverage limits of uninsured motorist policies have been inadmissible as evidence at trial—until now. In State Farm Mutual Automobile Insurance Company v. Earl, No. 36S05-1408-CT-562, 2015 WL 3608850 (Ind. June 9, 2015), the Indiana Supreme Court recently found that, in some instances, when evidence of injury is “overwhelming,” coverage limits of an uninsured motorist policy may be admissible as substantive evidence in a trial solely on the issue of damages.
Evidence of UM coverage limits is generally excluded because, factually, it has nothing to do with the amount of actual damages incurred by a plaintiff, and it has a tendency to prejudice the jury into simply awarding the maximum amount of the policy, irrespective of an amount that would make the plaintiff whole. In Earl, the Indiana Supreme Court found that evidence of the policy limits was potentially relevant under Indiana Evidence Rule 401. Specifically, the court found that, even though this case only involved the issue of damages, actions to recover under an uninsured motorist policy generally involve both questions of contract law (in relation to liability) and tort law (in relation to damages). And thus evidence of the coverage limits was found to be relevant as background information on the contractual relationship between State Farm and the Plaintiffs—despite the fact that the contractual relationship was not contested.
The Earl court also applied Rule 403 to determine whether the probative value of the coverage limits outweighed the danger of unfair prejudice to State Farm. In order to assess the potential for prejudice against State Farm, the court looked to Rule 411, and noted that “just as possessing insurance is not probative of fault, the coverage limit is not probative of the actual damages incurred by [the Earls], and we are sympathetic to litigants’ concerns that a jury may improperly rely on that coverage limit as a frame of reference.” Nevertheless, the court found that the admittedly minimal probative value of the evidence of policy limits was not outweighed by a danger of unfair prejudice because, in this case, the jury heard “extensive evidence” of Earl’s injuries and suffering, and was “properly instructed on the factors it may consider in quantifying the damages.” The court further noted that “[w]e can foresee instances where the insured’s injury is so minor and the coverage limit so large it gives rise to a legitimate concern that the jury will inflate its award . . . [i]n this case, however, we do not have such a concern.”
By so ruling, the Indiana Supreme Court has set a precedent that in UM coverage cases, where evidence of damages appears to be high, the policy limits are admissible as substantive evidence in support of damages.
If you have any questions regarding this decision, would like a complete copy of the opinion, or if you have any questions with respect to automobile liability insurance coverage in general, please contact a member of our Insurance Coverage/Bad Faith Practice Group or General Liability/Excess and Surplus Practice Group.
This has been prepared for informational purposes only. It does not contain legal advice or legal opinion and should not be relied upon for individual situations. Nothing herein creates an attorney-client relationship between the Reader and Reminger. The information in this document is subject to change and the Reader should not rely on the statements in this document without first consulting legal counsel.
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