A. Background:

After a windstorm or water leak event in your home, there is a good chance you will call a water restoration/mitigation contractor to immediately dry out your water-damaged ceilings, furniture, cabinetry, etc.  The whole situation is a frenzy.  Eventually, you’ll report an insurance claim to your insurance company.

In most instances, the restoration contractor will make you sign an “Assignment of Benefits” (AOB) or “Direction to Pay” so they can collect money on your insurance claim.  That way, you won’t pay out of pocket for their services.  This can save you thousands of dollars while getting high-quality, immediate service.

B. Based on the AOB, can the insurance company require the restoration contractor to appear for an EUO?

As discussed in prior articles, an EUO is important step for an insurance company to investigate your claim.  They will ask you specific questions on your claim under oath.  Inconsistent answers can irreparably compromise your claim. 

This is an important issue for two parties.  First, it can put the insured’s claim at risk depending on the contractor’s answers or nonappearance; and second, it can impact whether a contractor will ever get paid.

So if this happens to your claim, what then?  While the answer would vary depending on the state, Florida courts  have interpreted favorable to the insured to find that an insured is not obligated to produce a contractor (or handyman) for an EUO.

Let’s explore why:

In Avatar Property & Casualty Ins. Co. v. Castillo, 4D18-3154 (Fla. 3rd DCA 2020), the insurer insisted the insured produce their handyman and water restoration employees for an EUO.

The EUO provision in the policy required the insured to produce “your agents”; “your representatives”; and “all insureds”.  So the issue fell on whether the restoration contractor was an agent or representative.

The 3rd DCA found that while they may have repaired the property, they were not representatives or agents because they were not authorized to act for or in place of the insureds.  Therefore, the restoration contractor was not required to submit to an EUO.

Takeaway:

For your claim, carefully review the policy to see how it defines your EUO obligations.  If it’s similar to this case, then your restoration contractor will not be required to submit to an EUO.  However, if your policy had stated that you must produce “any persons who inspected or repaired the covered property” or some variation of the same, then you may be compelled to produce any contractor or handyman for an EUO. 

It is always helpful to have a professional like an attorney or public adjuster to review your policy before you make a final decision.

For a better understanding of how your EUO testimony will affect your claim, please review our other articles on this topic on the main page.