When is Evidence of Liability Insurance Admissible Under Maryland Law?

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Jonathan D. Nelson

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It is well established under Maryland law that, typically, evidence of liability insurance is not admissible to determine whether a party is negligent. Such evidence is highly prejudicial and irrelevant to the issue of a defendant’s liability. See Maryland Rule 5-411 and Accord Morris v. Weddington, 320 Md. 674 (1990). However, a 2015, opinion from the Maryland Court of Special Appeals provides an interesting analysis and holding regarding the use of liability insurance evidence where the issue in question is an employer’s negligent hiring of an allegedly negligent employee, potentially opening the door for admissibility of liability insurance under certain discrete factual circumstances.

In Asphalt Concrete Services, Inc. v. Moran Burdette Perry, 221 Md. App. 235 (2015), a pedestrian sued a dump truck driver (“Johnson”) and the driver’s alleged employer, Asphalt Concrete Services, Inc. (“ACS”), for damages after he was struck by the dump truck while crossing the street. At the trial level, the Circuit Court for Prince George’s County entered judgment in favor of the pedestrian, and against Mr. Johnson and ACS. Mr. Johnson and ACS appealed. ACS argued, among other things, that the trial court erred in allowing evidence of Mr. Johnson’s lack of liability insurance with respect to the negligent hiring claim against ACS. The Court of Special Appeals agreed with ACS, holding that the trial court erred in admitting evidence of Mr. Johnson’s lack of liability insurance as to the pedestrian’s negligent hiring claim against ACS because the lack of insurance was not the proximate cause of the accident. The Court, however, suggested that the lack of insurance may be relevant and, therefore, admissible if it can be shown that the lack of insurance was due to a party’s inability to obtain liability insurance and that this was the proximate cause of the accident.

Here, ACS claimed that Mr. Johnson’s lack of insurance was due to the policy lapsing because of his non-payment. It was evident, however, that the policy that lapsed was a comprehensive coverage policy only and not a liability policy. The Court of Special Appeals disagreed with ACS’s position, noting that a lack of liability insurance may be relevant to the issue of an employee’s competence. In this instance, because Mr. Johnson was hired to haul minerals to job sites over public highways, for which liability insurance was required, Mr. Johnson’s liability insurance was relevant to the negligent hiring claim.

Ultimately, however, the Court of Special Appeals held that further analysis was required; specifically, a determination of the proximate cause of the accident. The Court of Special Appeals held that “to generate a claim for negligent hiring, there must be evidence that the contractor’s alleged unfitness was directly related to the way the injured party was harmed. Here, it was not Mr. Johnson’s lack of insurance coverage that caused the accident. Rather, it was Mr. Johnson’s negligent driving that caused Mr. Perry’s injuries and damages. Because there was no causal link shown between Mr. Johnson’s lack of insurance and the accident, the lack of insurance was not relevant to the claim of negligent hiring, and the court erred in admitting it.” Id. at 265-266.

The opinion in Asphalt Concrete Services, Inc. v. Moran Burdette Perry sets forth the proper analysis counsel and the court need to apply in whether or not liability insurance information should be introduced at trial with respect to a negligent hiring claim. First, a lack of liability insurance may be relevant, judged based on the context and circumstances of the job being performed. Second, even if relevancy is established, the lack of liability insurance must be the proximate cause of injury. Therefore, the Court’s opinion in this matter does open the door for the potential admission of evidence of insurance under certain factual circumstances.

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