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The Admissibility of Evidence of the Amount of Premiums Paid for a Disability Policy  

In a trial contesting an insurer’s denial of total disability benefits, jurors, in some cases, might think that an award of total disability benefits would be an unfair windfall for the plaintiff.

To address a hidden bias like this, plaintiff’s attorneys may try to admit into evidence the amount of insurance premiums the plaintiff paid over the life of the policy.   In many cases, the amount the plaintiff has paid in disability insurance policy premiums over a number of years is quite significant.  Our firm has had focus group participants provide us with feedback that convinces us that many jurors are less likely to think that awarding total disability benefits to the plaintiff is undeserved if they understand how much the plaintiff paid for this type of coverage.

Can plaintiffs maintain that the amount of premiums they paid constitutes relevant evidence, if this fact is not in dispute? To put it another way, why should this evidence be admitted if the jury does not need to hear it to determine liability?

Whether courts will admit evidence of premiums paid depends on the court. We are not aware of precedent on this issue which is binding in a district court in Tennessee.  What we have are unpublished (which are non-binding) cases from federal district courts outside of the Sixth Circuit (the circuit in which Tennessee is located) that go both ways.

For example, in Soll v. Provident Life & Acc. Ins. Co. (E.D. La. July 5, 2002), the federal district court allowed the plaintiff to introduce evidence that he paid $94,000 in insurance premiums to the defendant for an own-occupation disability insurance policy.  The defendant argued that the parties could simply stipulate that the premiums were paid.  In response, the plaintiff admitted, candidly, that the evidence of his timely payments would cast the defendant “in a bad light in the eyes of the jury,” and help the jury find in his favor on his bad faith claim.

In ruling in favor of the plaintiff, the court held that evidence of the plaintiff’s premium payments is part of the ­res gestae of the case. The concept of res gestae comes up more in criminal cases and generally refers to background evidence or acts that are not in dispute, but which can provide a greater understanding of the alleged crime or transaction at issue. Here, the court did not elaborate on its holding, but it appeared to suggest that evidence that the plaintiff made costly premium payments would allow the jury to obtain a complete picture of the defendant’s decision to deny benefits.

In Ridolfi v. State Farm Mut. Auto. Ins. Co. (M.D. Pa. July 27, 2017), the court also analyzed whether the amount of premiums paid should be heard by a jury, and came to a different conclusion.  Acknowledging that the bar for relevant evidence is low, the Ridolfi court still could not justify admitting the evidence at issue.  As the court noted, there was no allegation or defense that the plaintiff failed to pay her premiums and, therefore, the plaintiff did not need this evidence to prove her breach of contract and bad faith claims.  In fact, the court noted that this evidence could confuse a jury since it might imply a false measure of damages.

Although the Ridolfi v. State Farm case was not a disability case, the court’s rationale would still seem to apply: A jury can determine liability without hearing that the plaintiff was current on her premium payments for her disability insurance policy.

A disability case is unique, however, in one important respect. Unlike your average insurance case, in a disability case, it is not always easy to ascertain the nature of what is being insured. Many disability insurance policies award total disability benefits only if the claimant cannot perform the material and substantial duties of his or her pre-disability occupation.  How to identify those duties, however, will probably not be addressed in the policy.  Plaintiffs may be able to argue that evidence that they paid a substantial amount of premiums over the life of the policy will help a jury understand the essence of their occupation, and what they were trying to cover in the event of a disability.

This is especially true for a person whose occupation includes different levels of distinct duties. Consider a hypothetical case, for example, in which a flight school instructor also flew commercial passenger planes until a heart condition prevented her from flying.  Because she could still teach, the insurer denied her disability benefits. In a disability lawsuit, she may argue that flying commercial planes generated most of her income and, therefore, was a material and substantial part of her occupation, while teaching flight school was secondary because it did not earn her a lot of money. A jury would find her argument more convincing, she may contend to the court, if she were able to show that she paid a high dollar amount of premiums over the duration of her policy.  After all, why would she pay for an expensive disability policy in order to insure a part of her occupation that was not particularly lucrative?

We do not know how a court would rule in our hypothetical example.  However, it is worth keeping in mind that, in trying to inform the jury of the nature of the plaintiff’s occupation, the cost of maintaining the policy may be more probative in a disability insurance policy case than it might in other insurance cases.