Courts are reticent to allow the introduction of evidence pertaining to insurance coverage in accident cases. The reason is that unless it is somehow pertinent to the cause of the crash or extent of the injuries, it can be prejudicial to a jury.
For example, if jurors know that a certain defendant has no insurance, they may decline to impose a significant award of damages to the plaintiff – knowing the defendant is going to have to come out-of-pocket for that expense. Similarly, if jurors had knowledge that a defendant had a sizable insurance policy, they may be inclined to impose a heftier damage award – because they know the insurance company can pay.
Courts prefer to simply take it out of the equation.
In the recent Maryland case of Perry v. Asphalt & Concrete Servs., Inc., a pedestrian was struck and severely injured by a dump truck wherein neither the driver nor the vehicle had the proper liability coverage. But was this fact admissible?
The trial court allowed it, but the Maryland Court of Special Appeals and then later the Maryland Court of Appeals (the highest court in that state) found this to be an error and ordered a retrial.
The case was somewhat complicated in that it took some time to property identify the correct defendants. Initially, there were three defendants: The asphalt company, the subcontractor and the driver. However, it turned out that the subcontractor was not a proper entity, and was instead a way for the driver to illegally operate his dump truck – for which he had no liability insurance. He also had a suspended driver’s license.
The asphalt company had hired the subcontractor to help with hauling stone and concrete to a nearby church parking lot, where a children’s playground was under construction. But one afternoon, the dump truck driver struck a pedestrian as the victim was crossing the street in a crosswalk.
Victim suffered serious injuries, including head trauma and broken ribs.
Plaintiff filed a personal injury lawsuit for damages, alleging the asphalt company, subcontractor and driver were negligent.
The asphalt company filed a motion asking the court to find there was no employee-employer relationship between it and the driver. District court denied this request.
Then with regard to the lack of insurance, the asphalt company argued this was inadmissible because it wasn’t the proximate cause of the accident or negligence. The court reserved its ruling on this matter.
Once it was revealed the subcontractor didn’t legally exist according to tax records, plaintiff amended his complaint to add that the asphalt company had negligently hired and negligently supervised the subcontractor.
At trial, defense argued again that any evidence of lack of insurance should not be introduced. However, the court did allow it.
Ultimately, jurors returned a verdict favorable to pedestrian for $530,000.
On appeal, defense argued the information regarding the lack of insurance should not have been allowed to be considered by the jury.
Although neither side disputed that the lack of insurance was not relevant to the claim of ordinary negligence, plaintiff argued it wasn’t prejudicial. However, the court could not say that was true. That’s because a central issue here was whether the driver was an employee of the asphalt company or an independent contractor. Jurors ultimately determined the driver was an employee/servant/ agent, which meant the asphalt company was vicariously liable for his actions – even if it hadn’t negligently hired him. The fact that he didn’t have insurance, the court ruled, was likely a deciding factor in the jury reaching the conclusion that the driver was an employee, and not an independent contractor (as independent contractors would have their own insurance).
Therefore, the case was remanded for a new trial.
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Perry v. Asphalt & Concrete Servs., Inc., March 28, 2016, Maryland Court of Appeals
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