Compliance With a Demand for an Examination Under Oath Is Required to Receive Insurance Money
Under Texas law, a demand for an Examination Under Oath, commonly called an EUO, does not require the insurance company to provide a business insured under a Commercial Property and Building Policy (or any policy for that matter).
The typical commercial property policy language reads as follows: "We may examine any insured under oath, while not in the presence of any other insured and at such times as may be reasonably required, about any matter relating to this insurance or the claim, including an insured's books and records.
In the event of an examination, an insured's answers must be signed.
" Although the representative of the business may feel that the facts of the loss are clear, and that the demand is unreasonable and simply a tactic to delay paying the company's property damage claim under your Commercial Property and Building Coverage, that "feeling" should not deter the company representatives from complying with the request.
Compliance with the insurance company's request is a condition precedent to the business receiving payment for the covered loss.
See In re Foremost County Mutual Ins.
Co.
, 172 S.
W.
3d 128 (Tex.
App.
- - Beaumont 2005, orig.
proceeding).
Simply stated, if the business representatives refuse to provide an EUO for the company, the company may not be compensated for a covered loss.
I am routinely asked to conduct EUOs for various insurance companies, and whether the business appreciates the reason for the request, the insurance company certainly has a justification for moving forward.
Oftentimes, the reason for the EUO has absolutely nothing to do with any suspicions regarding the company's involvement in the loss or some conspiracy to defraud.
It may well be an effort by the insurance company to identify potential subrogation sources from which to seek reimbursement for payments that are eventually made to your business for the loss.
With all this being said, if a business files an insurance claim and receives an EUO demand, especially in large losses, the business has a contractual duty to cooperate and comply with the conditions of the insurance policy.
In order to ensure that the business does not inadvertently do something that risks a denial of coverage, it is always prudent for the business to consult with a legal professional specializing in insurance coverage and business litigation upon receipt of a demand for an EUO, and this consultation should extend to having counsel present at the EUO(s).
The typical commercial property policy language reads as follows: "We may examine any insured under oath, while not in the presence of any other insured and at such times as may be reasonably required, about any matter relating to this insurance or the claim, including an insured's books and records.
In the event of an examination, an insured's answers must be signed.
" Although the representative of the business may feel that the facts of the loss are clear, and that the demand is unreasonable and simply a tactic to delay paying the company's property damage claim under your Commercial Property and Building Coverage, that "feeling" should not deter the company representatives from complying with the request.
Compliance with the insurance company's request is a condition precedent to the business receiving payment for the covered loss.
See In re Foremost County Mutual Ins.
Co.
, 172 S.
W.
3d 128 (Tex.
App.
- - Beaumont 2005, orig.
proceeding).
Simply stated, if the business representatives refuse to provide an EUO for the company, the company may not be compensated for a covered loss.
I am routinely asked to conduct EUOs for various insurance companies, and whether the business appreciates the reason for the request, the insurance company certainly has a justification for moving forward.
Oftentimes, the reason for the EUO has absolutely nothing to do with any suspicions regarding the company's involvement in the loss or some conspiracy to defraud.
It may well be an effort by the insurance company to identify potential subrogation sources from which to seek reimbursement for payments that are eventually made to your business for the loss.
With all this being said, if a business files an insurance claim and receives an EUO demand, especially in large losses, the business has a contractual duty to cooperate and comply with the conditions of the insurance policy.
In order to ensure that the business does not inadvertently do something that risks a denial of coverage, it is always prudent for the business to consult with a legal professional specializing in insurance coverage and business litigation upon receipt of a demand for an EUO, and this consultation should extend to having counsel present at the EUO(s).
