Examination Under Oath Compliance

Most insureds living in Grand Prairie, Fort Worth, Dallas, Arlington, Pantego, Hurst, Euless, Bedford, Keller, Colleyville, Saginaw, and other places in Texas would not be sure what it means to submit to an “examination under oath” (EUO).
An EUO is where a person is asked questions, usually by an attorney or insurance investigator, after the person has taken an oath to tell the truth, and the testimony is taken by a certified court reporter.
The United States District Court, Southern District, Houston Division, issued an opinion on April 11, 2011, where part of the case dealt with the requirements of an EUO. The style of the case is, Rossco Holdings, Inc. v. Lexington Insurance Company.
Here is some background. The case involves a claim for storm damage to real property located in College Station owned by Rossco and insured by Lexington. One of the issues in the case appears to center around when the policy was taken out, when premiums were paid and an issue about some attempts at cancellation of the policy by Rossco.
On or about July 20, 2009, a rain storm damaged Rossco’s property. On August 17, 2009, Rossco filed a claim with Lexington notifying it of its loss and seeking damages. Upon investigating the claim, Lexington informed Rossco of its concerns regarding coverage and made the following request for information:
In order to assist us with the investigation, we ask that you provide us copies of all documents, including emails and correspondence, pertaining to your request that Lexington cancel the policy, and your subsequent request to extend the termination date of the policy to July 28, 2009. We also ask that you provide us with a copy of all documents that reflect, relate or pertain to the date of loss, the payment of the premium, and the submission of the notice of loss to Lexington.
On October 23, 2009, Lexington made a second request for the aforementioned information. On October 29, 2009, Rossco provided Lexington with a Sworn Statement of Loss dated October 28, 2009, which listed “TBD” for the values of both the property and claimed loss. On November 11, 2009, Lexington sent another request for information to support Rossco’s claimed loss and advising him of its intent to conduct an EUO of Rossco’s corporate representative. Rossco then filed this lawsuit alleging breach of contract as well as violations of the unfair settlement practices and prompt payment provisions of the Texas Insurance Code.
Lexington submitted a motion for summary judgment to the court requesting a ruling in its favor due to Rossco not complying with the policy’s terms. Rossco’s arguement was that it had “substantially complied” with the requests of Lexington and that Lexington had waived its right to conduct an EUO.
Lexington, in particular argued, that Rossco, in an effort to obscure Lexington’s investigation into its loss, repeatedly refused to comply with conditions precedent to coverage under the policy by refusing to furnish documents to support its claim of coverage and refusing to participate in an EUO. It alleges that because Rossco failed to furnish documents pertinent to its claimed loss and failed to submit to an EUO, it failed to comply with conditions precedent to coverage and is not entitled to benefits under the policy. Consequently, Lexington maintained that absent Rossco’s compliance with the aforementioned conditions precedent, it has no duty to provide benefits under the policy and Rossco’s claim for breach of contract fails. Likewise, Lexington argued that Rossco’s claims for extra-contractual damages under the Texas Insurance Code also fail because Lexington cannot be in violation of the Insurance Code if its duties and obligations have yet to be triggered due to Rossco’s non-compliance with the policy’s terms and conditions governing coverage.
In discussing this case, the court cited well settled law that “Insurance policy provisions requiring the insured’s submission to examination under oath as a condition precedent to sustaining a suit on the policy are valid.” First, it is well settled law in Texas that abatement rather than exclusion or barring of a claim is the insurer’s appropriate remedy for enforcement of an insured’s conditions precedent to coverage. Second, without commenting on the strength or credibility of the evidence presented, the Court determined that the parties had raised genuine issues of material fact concerning whether all necessary and reasonably comprehensive information in support of Rosco’s proof of loss had been provided to Lexington in compliance with the policy’s terms and whether Lexington has handled, processed and or investigated Rossco’s claim in good faith.
This court then denied the request for summary judgment and abated the case until 30 days after Rossco provides Lexington with all documents previously requested and submited to an EUO.
An experienced Insurance Law Attorney should be consulted anytime an insurance company is asking for an examination under oath. There are a couple of reasons for this. One is that the insurance company oftens asks for items or ask questions that they do not have a right to be asking. Second, when a claims investigation has reached a point where the insurance company is requesting an EUO, that is usually a sign they are going to deny the claim and they are only seeking further information to justify their denial.