Uninsured Motorist Policy Limits Admissible

State Farm Mutual Automobile Insurance Company v. Kimberly S. Earl and The Estate of Jerry Earl

Ruling on an issue of first impression, the Indiana Supreme Court unanimously held that it was within the discretion of the trial court to admit an insurance policyholder’s $250,000 uninsured motorist coverage limit as evidence.

On September 3, 2008, Jerry Earl was riding his motorcycle on I-65 when a tractor-trailer entered Jerry’s lane forcing him to swerve out of the truck’s way and into the median. Jerry was thrown from his bike and sustained extensive injuries. The tractor-trailer driver did not stop and was never identified. Jerry made a claim under State Farm’s uninsured motorist coverage policy for the full amount of $250,000. State Farm refused his claim, so Jerry sued for breach of their insurance contract and Kimberly, Jerry’s wife, brought a loss of consortium claim.

State Farm admitted liability, so only the question of damages was presented to the jury. Before trial, State Farm attempted to exclude any evidence pertaining to the coverage limit, arguing that the limit was not relevant to the question of damages. The trial court disagreed and ultimately ruled in favor of the Earls, returning a verdict of $250,000—the precise amount of the policy limit.

Although evidence of liability insurance is not admissible to show fault, evidence may be relevant if the facts help the jury understand the relationship of the parties. State Farm asked the Supreme Court to adopt a bright-line rule that coverage limits are inadmissible and irrelevant to the determination of tort damages.. The Earls proposed an opposing bright-line rule that coverage limits are relevant to the underlying contract claim and therefore must be admitted. The Supreme Court declined to adopt either stance and instead, believed it more proper to rely upon the trial court’s own determination as to what evidence is probative on a case-by-case basis.  Keeping with Evidence Rule 403, the Supreme Court balanced State Farm’s risk of prejudice against the probative value of the policy’s coverage limit as background information and found no unfair prejudice.

It is imperative to note that the Indiana Supreme Court’s decision does not propose that coverage limits are always admissible.


Filed Under: Insurance

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