Insurers generally have the right to conduct a full, fair and thorough investigation of a claim. Depending on the policy language, one investigative tool available to insurers is the examination under oath, or an “EUO.” In an EUO, a representative of the policyholder is sworn in, and an employee of or attorney for the insurer asks questions related to the claim. EUOs may be a condition precedent to coverage, meaning failure to appear and comply with a reasonable EUO request may void coverage for the claim. See e.g. Quality Health Supply Corp. v. Nationwide Ins., No. 2021-06955, 2023 WL 3486573 (NEW App. Div. May 17, 2023); Raymond v. State Farm Fire & Cas. Co., 614 F. Supp. 3d 1303 (N.D. Ga. 2022).
An EUO request is usually made in a written letter from the insurer or its agent. The request will cite the relevant policy provision that entitles the insurer to take an EUO. It may (but need not) identify topics that the insurer wishes to address in the EUO. The request will specify the time and place of the EUO, but it should give the policyholder a chance to suggest another time if there is a scheduling conflict.
EUO requests may include a list of document and information requests, sometimes referred to as “requests for information” or “RFIs.” Responsive documents can be produced before the EUO or the policyholder can submit the documents to the EUO.
EUOs usually take place in an office building or law firm close to the location of the claim or otherwise convenient for the policyholder. A court reporter should be present throughout the proceedings. The court reporter swears in the policyholder and records the exchange.
An EUO is considered sworn testimony. The policyholder must testify truthfully, although in some jurisdictions he or she may assert a constitutional right against self-incrimination (ie, “invoking the Fifth Amendment”). The policyholder representative must not speculate or testify about information that he or she does not remember.
A policyholder may have a lawyer represent him at the EUO.
When do insurance companies request an EUO?
Most claims investigations do not involve an EUO. Whether an insurer decides to take an EUO on the facts and issues of the claim. EUOs are often used at the end of a claims investigation process when the insurer has collected conflicting or incomplete information during its investigation. So if there have been any changes during the claim, the policyholder should be prepared to explain them at the EUO. For example, if there has been an increase in the cost or extent of repair following a claim, the policyholder should be prepared to testify as to what caused the change.
Failure to comply
Often, insurance policies treat compliance with an EUO request as a condition of coverage, meaning that an insurer can deny coverage for the claim if the policyholder does not comply. See e.g. Quality health2023 WL 3486573 (NEW App. Div. May 17, 2023); Raymond, 614 F. Supp. 3d 1303 (N.D. Ga. 2022).
Adequate compliance exists on a spectrum from total non-attendance of EUO, to failure to answer relevant, material questions, to failure to answer irrelevant, non-material questions. An insurer’s right or ability to deny a claim based on compliance with an EUO term depends on the policy language and the law of the relevant jurisdiction.
Tips for policyholders
EUO inquiries may appear to be informal invitations to chat with your insurer about your claim. Do not let yourself be fooled. EUOs are recorded, sworn testimony, akin to a deposition or testimony at trial. Failure to comply or insufficient compliance may result in the loss of all coverage for the claim and even an insurer’s attempt to void the policy entirely.
Policyholders should prepare for an EUO and associated RFIs with the seriousness that EUOs and RFIs require. That preparation will generally be guided by internal or external counsel. Policyholders should also consider retaining effective, experienced counsel to represent them at the EUO, much like during a deposition.