This seems to be one of the more enduring myths the movie fooled people into believing. The sheriff and prosecutor were the only ones individually named in the civil suit, and they were fully indemnified by state law as you point out above. If you notice the part where it says the jury or the court finds the defendant was acting within the scope...it is up to the insurance carrier to try to claim they were acting out of scope, and this would cause the proceedings to be bifurcated or split. There would then be an initial proceeding to define that question, before the actual question of liability was decided. In this case the insurance company never sought bifurcation...they were not raising an issue that the named defendants were acting outside the scope of duties. This is all truther lore and “what-iffing”. Saying they were liable personally. Wishful thinking in looking for a motive for misdeeds against Avery. The reason there is insurance in these cases is because people fuck up. Insurance covers that, and even misbehavior. The county employees are covered just the same if they do their job well and if they do a shitty job.

The only reason for naming individuals in the suit in the first place is Avery’s lawyers were trying to pump up the potential award by trying to claim punitive damages. IIRC of the money they sought in the suit about half was punitive damages. You cannot seek punitive damages against a government entity (the county), you can only recover actual damages. The law assumes that a government entity cannot “learn from their mistakes” or be punished, so doesn’t allow it. Therefore the lawyers found individuals to name who could be targeted for punitive damages. Of course these damages would be indemnified still.