Personal Injury Trial: Evidence of Automobile Insurance

One of the most difficult things to explain to a client is that at a personal injury trial in North Carolina you cannot mention the defendant’s automobile insurance.   The jury is only told the dispute between the injured party and the actual defendant who created the situation.   The actual rules of evidence only prohibit the mention of automobile insurance for issues involving ability to pay; however, practically if insurance is mentioned judges are very reluctant to allow any testimony on those issues. Evidence that a person was or was not insured against liability is not admissible upon the issue whether he 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.  N.C. R. Evid. § 8C-1,8C-1411N.C. Gen. Stat. Ann. § 8C-1,§ 8C-1,8C-1 Rule 411 The above is the actual rule of evidence used by the courts in determining what witness are allowed to discuss. In Fincher v. Rhyne, 266 N.C. 64, 68-70, 145 S.E.2d 316, 318-20 (1965) the court discussed the general reason why the rule was promulgated and what the court looked at in deciding that you cannot mention automobile insurance in North Carolina. ‘Ordinarily, in the absence of some special circumstance, it is not permissible under our decisions to introduce evidence of the existence of liability insurance or to make any reference thereto in the presence of the jury in the trial of * * * cases’ where the relief sought is damages for injuries caused by negligence. Taylor v. Green, 242 N.C. 156, 87 S.E.2d 11; Jordan v. Maynard, 231 N.C. 101, 56 S.E.2d 26; Duke v. Crippled Children’s Comm., 214 N.C. 570, 199 S.E. 918; Luttrell v. Hardin, 193 N.C. 266, 136 S.E. 726; Stanley v. Whiteville Lumber Co., 184 N.C. 302, 114 S.E. 385; Lytton v. Marion Manufacturing Co., 157 N.C. 331, 72 S.E. 1055. This rule is almost universal. 21 Appleman: Insurance Law and Practice, s. 12832; Anno.-Informing Jury of Liability Insurance,  **31956 A.L.R. 1418; Anno.-Showing as to Liability Insurance, 4 A.L.R.2d 761. Since the enactment of compulsory insurance statutes, it has been held in a few jurisdictions, including California, Georgia and South Carolina, that reference to liability insurance is not error. A.L.R.2d Supplement Service (1960) p. 297. However, our decisions, since the enactment of the Vehicle Financial Responsibility Act of 1957 (G.S. §§ 20-309 to 20-319), have adhered to the general rule above stated. Whitman v. Whitman, 258 N.C. 201, 128 S.E.2d 249 (1962); Greene v. Charlotte Chemical Laboratories, Inc., 254 N.C. 680, 120 S.E.2d 82 (1961); Hoover v. Gregory, 253 N.C. 452, 117 S.E.2d 395, 100 A.L.R.2d 341 (1960). From the opinion in Hoover, Stansbury finds ‘indications that a departure from the rule will not always be censured as severely in the future as it has in the past.’ Stansbury: North Carolina Evidence, 2d Ed. s. 88. The existence of insurance covering defendant’s liability in a negligence case is irrelevant to the issues involved. It has no tendency to prove negligence or the quantum of damages. It suggests to the jury that the outcome of the case is immaterial to defendant and the insurer is the real defendant and will have to pay the judgment. It withdraws the real defendant from the case and leads the jury ‘to regard carelessly the legal rights’ of the real defendant.  *69 ‘No circumstance, a court has said, is more surely calculated to cause a jury to render a verdict against a defendant, without regard to the sufficiency (weight) of the evidence, than proof that the person against whom such verdict is sought is amply protected by indemnity insurance.’ 56 A.L.R. 1422. These reasons for exclusion are as valid under compulsory coverage as under voluntary insurance. But it is argued that it is unrealistic to attempt to conceal from juries a fact of common knowledge-the compulsory requirement that all vehicles be insured. Liability insurance coverage is required by law in this State, and such requirement is, of course, a matter of common knowledge, but there are many valid reasons for excluding evidence of, or reference to, such coverage in addition to those mentioned above. There are instances in which insurance exists but under the particular circumstances there is no coverage. The limits of coverage vary-the law requires $5000 coverage for injury to one person; all coverage in excess of this amount is voluntary. The jury might infer from the mention of insurance that there is coverage to the extent of the damages prayed for, or they might guess from some reference made that the coverage is only $5000 and be thereby influenced to award inadequate damages. Furthermore, the Vehicle Financial Responsibility Act of 1957 permits the possibility of time gaps in insurance coverage, that is, short periods in which vehicles are uninsured. Faizan v. Grain Dealers Mutual Insurance Co., 254 N.C. 47, 55, 118 S.E.2d 303. If it is realistic to allow testimony and references to liability insurance, it would be more realistic to permit the introduction of the terms of the policy and all questions of coverage in the particular case. Such injection of irrelevant issues would be insupportable. The courts cannot, of course, control the deliberations of the jury when they have retired to make up their verdicts, and cannot ‘black out’ segments of their thinking related to matters of common knowledge. But the courts can now, just as effectively as before the enactment of compulsory liability insurance laws, control the trial and exclude irrelevant facts and confine the evidence and the matters arising during the course of the trial to the issues involved. Where testimony is given, or reference is made, indicating directly and as an independent fact that defendant has liability insurance, it is prejudicial, and the court should, upon motion therefor aptly made, withdraw a juror and order a mistrial. Luttrell v. Hardin, supra; Allen v. Garibaldi, 187 N.C. 798, 123 S.E. 66; Stanley v. Whiteville Lumber Co., supra; Lytton v. Marion Manufacturing Co., supra. But there are circumstances in which it is  **320 sufficient for the court, in its discretion, because of the incidental nature of the reference, to merely instruct the jury to disregard it.  *70 Keller v. Caldwell Furniture Co., 199 N.C. 413, 154 S.E. 674; Lane v. Paschall, 199 N.C. 364, 154 S.E. 626; Fulcher v. Pine Lumber Co., 191 N.C. 408, 132 S.E. 9; Gilland v. Carolina Crushed Stone Co., 189 N.C. 783, 128 S.E. 158; Bryant v. Welch Furniture Co., 186 N.C. 441, 119 S.E. 823; Norris v. Holt-Morgan Mills, 154 N.C. 474, 70 S.E. 912. Fincher v. Rhyne, 266 N.C. 64, 68-70, 145 S.E.2d 316, 318-20 (1965). In 2004 the court still considered the Fincher case as controlling as to automobile insurance.Campbell v. McIlwain, 163 N.C. App. 553, 556-57, 593 S.E.2d 799, 802 (2004) Generally, “[w]here testimony is given, or reference is made, indicating directly and as an independent fact that defendant has liability insurance, it is prejudicial, and the court should, upon motion therefor *557  aptly made, withdraw a juror and order a mistrial.” Fincher v. Rhyne, 266 N.C. 64, 69, 145 S.E.2d 316, 319 (1965). However, ” there are circumstances in which it is sufficient for the court, in its discretion, because of the incidental nature of the reference, to merely instruct the jury to disregard it.” Id. at 69, 145 S.E.2d at 319-20. ” The decision of whether a mistrial is required to prevent undue prejudice to a party or to further the ends of justice is a decision vested in the sound discretion of the trial judge.” Medlin v. FYCO, Inc., 139 N.C.App. 534, 540, 534 S.E.2d 622, 626 (2000), disc. rev. denied, 353 N.C. 377, 547 S.E.2d 12 (2001) (holding that the trial court did not abuse its discretion in denying defendant’s motion for a mistrial based on a witness’ mention at trial of defendant’s relationship with defendant’s insurer).  Campbell v. McIlwain, 163 N.C. App. 553, 556-57, 593 S.E.2d 799, 802 (2004)