Examinations Under Oath: Be Careful What You Ask For

My article published in Adjusting Today,¹ Property Insurance 101: Everything You Always Wanted to Know About Examinations Under Oath – But Were Afraid to Ask!, was the subject of my blog post last month. As discussed in the article, an examination under oath (“EUO”) is not just another deposition. An insured’s counsel must be well-versed on the nature and the extent of the contractual duty to submit to an EUO and the consequence of non-compliance.

The Eleventh Circuit Court of Appeal’s recent decision in Hutchinson v. Allstate Insurance Company,² demonstrates the harsh consequence of an insured’s refusal to answer material questions during an EUO. There, a fire destroyed the insured’s dwelling. Allstate requested the insured to submit to an EUO because it had doubts he resided at the dwelling at the time of the fire. The insured appeared for the EUO without counsel. But, before answering questions, he expressed concern about a letter he had received from Allstate in which Allstate indicated that he had not responded to communications from its attorney regarding scheduling the EUO. The insured told Allstate’s attorney that the statements in the letter were not true and asked Allstate to recant the statements. Allstate’s attorney refused to recant the statements, to which the insured responded, “We can’t move forward until this letter is corrected. I don’t have a problem answering any questions you ask.”

Allstate’s attorney warned the insured that Allstate would treat his failure to respond to his questions as a material breach of the contract that probably would result in the denial of his claim. The insured again stated that he would answer Allstate’s questions, but insisted that Allstate recant the disputed statements in the letter first. Allstate’s attorney asked the insured questions regarding his residence; the insured sat in silence, giving no responses. Allstate subsequently denied the claim.

Over a year after his claim was denied, the insured retained counsel who sent a demand letter to Allstate threatening to sue unless the claim was paid within 60 days. The letter also indicated the insured was willing to sit for a second EUO. Allstate agreed to a second EUO expressly subject to a full and complete reservation of all rights and defenses. That EUO never occurred, and the insured sued Allstate when it did not comply with his demand.

Allstate moved for summary judgment based on the insured’s failure to answer Allstate’s questions at his EUO. The district court granted the motion and dismissed the suit. In affirming the lower court’s decision, the Eleventh Circuit rejected the insured’s argument that his offer to submit to an EUO over a year after Allstate denied his claim created a genuine issue of material fact regarding his compliance with the insurance contract. The Eleventh Circuit reasoned that the insured’s belated offer did not cure his prior breach or reinstate Allstate’s obligation to pay his claim.

Hutchinson follows other court decisions applying a “strict compliance” standard in determining whether a breach of the EUO requirement is material. Under that standard, an insured’s reliance on the advice of counsel in refusing to answer questions at an EUO is not a reasonable excuse for failing to comply with the EUO requirement.³ Likewise, a refusal to submit to an EUO unless it is a stenographic recording, as opposed to an audio recording, is not a reasonable excuse.⁴ Similarly, the insurer’s failure to provide information concerning its investigation, including copies of previous statements, is not a reasonable excuse.⁵ Nor is the insurer’s refusal to execute a confidentiality agreement that imposes limitations on the insurer’s use of the insured’s personal information a reasonable excuse for the insured’s non-compliance with the EUO requirement.⁶

The result in Hutchinson may have been different if the insured had initially retained counsel to represent him at the EUO. Unfortunately, I receive many calls from policyholders whose claims were denied after they submitted to an EUO without legal representation. In many cases, the dye has been cast, and there is little I can do to help them. So, to all insureds out there, make sure you have experienced counsel who understand the EUO requirement attend any EUO.
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¹ Adjusting Today is published as a public service by Adjusters International, Inc.
² Hutchinson v. Allstate Ins. Co., 2018 WL 3359549 (11th Cir. July 10, 2018).
³ See Abdelhamid v. Fire Ins. Exch., 106 Cal. Rptr.3d 26 (Cal. Ct. App. 2010).
⁴ See N.C. Farm Bur. Mut. Ins. Co. v. Lilley, 2018 WL 414135 (N.C. App January 16, 2018).
⁵ See Lester v. Allstate Ins. Co., 743 F.3d 469 (6th Cir. 2014); Morris v. Econ. Fire & Cas. Co., 848 N.E.2d 663 (Ind. 2006).
⁶ See Safeco Ins. Co. of Oregon v. Masood, 330 P.3d 61 (Or. Ct. App. 2014).