For what purpose is liability insurance generally inadmissible?

Liability insurance is generally inadmissible to show that a person acted negligently because it could lead to unfair prejudice. The introduction of liability insurance could suggest to a jury that the party has a financial motive to settle or that they possess a level of culpability simply because they have insurance coverage. The rules of evidence are designed to ensure that juries focus on the relevant facts of the case rather than being influenced by the presence of insurance, which might unfairly bias their perception of a party’s actions or responsibility in the context of negligence.

In malpractice cases or personal injury claims, for example, the mere fact that a defendant has liability insurance does not inherently indicate whether they acted negligently or not. The core concern is that the jury may infer guilt or negligence simply based on the existence of the insurance, which detracts from the fair adjudication of the actual facts of the case. As a result, courts often exclude such evidence under rules that aim to promote fairness and avoid misleading the jury.

The other contexts—like demonstrating witness credibility, contesting ownership of property, or proving damages in a contract dispute—do not carry the same potential for unfair prejudice that would arise from using liability insurance to imply negligence.