Does the existence of a previous settlement with an insurer influence a jury's evaluation of the insured's liability?

California, United States of America


The following excerpt is from Moradi-Shalal v. Fireman's Fund Ins. Companies, 250 Cal.Rptr. 116, 46 Cal.3d 287, 758 P.2d 58 (Cal. 1988):

Further, the existence of a previous settlement could itself improperly influence a jury's evaluation of the insured's liability. The jury would know that the insured would not be adversely affected by the verdict, and it would also necessarily be aware that the insurer had paid money in settlement to the claimant on behalf of the insured. Although, as we have noted, the existence of a settlement is irrelevant to the issue of the insured's liability (see Zalta v. Billips, supra, 81 Cal.App.3d at p. 190, 144 Cal.Rptr. 888), it would be difficult to prevent the jury from considering the [758 P.2d 74] settlement as evidence that the insured was liable. This use of evidence of settlement would violate Evidence [46 Cal.3d 312] Code section 1152, which prohibits admitting such evidence to prove the settling party's liability on the claim settled.

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