Case Study 1:

You live with your wife, your adult son, and his adult wife (your daughter-in-law).  You recently filed an insurance claim for some kind of water or roof damage to your house.  During the claims investigation, your insurance company asks all three of you to submit to an Examination Under Oath (EUO).  Under the policy, only you are the named insured.

Question: Are your children and spouse legally required to submit to an EUO for your property insurance claim? Yes – pursuant to Durasevic v. Grange Ins. Co. of Michigan, No. 18-2035, 2019 WL 3035750 (6th Cir. July 11, 2019).

In a recent federal case, the appellate court held that the named insured’s son and daughter-in-law were required to submit to an EUO because they resided in the insured’s house.  Because they failed to submit to the EUO, the insurance company properly denied the claim.  The insured was left with nothing.

Here’s what happened:

The insured’s house had two fire losses in a span of seven months.  During this time, the insured lived with his wife, his two sons, and his daughter-in-laws.  After the first fire, the insured reported an insurance claim, and were paid $600,000 for damages.  The insurer also paid for a temporary apartment for the family to live in while they made repairs to the home.

While living away from the house, the insured had their second fire loss.  He filed a second insurance claim seeking approximately $330,000 for additional damages from the second fire.  This time in their claims investigation, the insurer hired a private investigator to determine the cause of loss.  The private investigator concluded that someone had intentionally started the fire (i.e. arson).  The insurer also concluded that one of the insured’s son had been at the house the night of the second fire.

In calculating coverage, the insurer requested all the adult family members to submit to an EUO and asked the insured to provide tax, bank, phone, and Facebook records.  The insured’s adult son and daughter-in-law refused to make themselves available for an EUO.  The insured himself also failed to provide the requested documents.  As a result, the insurer denied the claim.

Litigation:

After the claim was denied, the insured filed a lawsuit, alleging wrongful denial of coverage on the second insurance claim.  The insurer argued the denial was due to the insured’s failure to comply with the post-loss duties under the insurance policy.

The insurance policy required – as a precondition of coverage – that “the insured person … submit to examinations under oath.”  The policy further defined “insured person” to include the named insured, and all relatives who live in the same house.

Accordingly, the court found that the son and daughter-in-law qualified as “insured persons” under the policy’s definition.  Their failure to appear for the EUO was a violation of a condition precedent, sufficient to legally allow the insurer to deny the claim.  The insured’s failure to provide the requested document was also a violation of the policy’s cooperation clause.  These documents were requested because the insurer suspected fraud, and the insured failed to cooperate in the insurer’s investigation.  This provided further basis for the insurer to deny the claim.

Takeaway:

• If an insurance company requests an EUO on your claim, you and your family must submit to it (or risk getting a denied claim).
• If an insurance company requests documentation including receipts and photographs, you must provide them these documents to the best of your abilities.  If you do not have them, then send a letter by certified mail evidencing the same.
• If a claim is denied for failure to cooperate or failure to comply, do not immediately file a lawsuit.  See what you can do to correct your error (re-schedule the EUO).
• Retain an attorney or public adjuster early on to resolve these issues before they become problematic.

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.