Raman scattering experiments on stoichiometric, Mott-insulating LaTiO$_3$ over a wide range of excitation energies reveal a broad electronic continuum which is featureless in the paramagnetic state, but develops a gap of $sim 800$ cm$^{-1}$ upon cooling below the Neel temperature $T_N = 146$ K. In the antiferromagnetic state, the spectral weight below the gap is transferred to well-defined spectral features due to spin and orbital excitations. Low-energy phonons exhibit pronounced Fano anomalies indicative of strong interaction with the electron system for $T > T_N$, but become sharp and symmetric for $T < T_N$. The electronic continuum and the marked renormalization of the phonon lifetime by the onset of magnetic order are highly unusual for Mott insulators and indicate liquid-like correlations between spins and orbitals.