Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

Prudential Property vs. Swindal, 622 So. 2d 467 (Fla. 1993), is a Florida Supreme Court case in which the Court held that policies are read by their plain language, with terms and words which are undefined in the policy being defined by their plain everyday meaning. In Koikos vs. Travelers Ins., 849 So. 2d 263 (Fla. 2003), the Florida Supreme Court added the phrase, “plain everyday meaning as would be understood by an ordinary person.” Further, in Excelsior Ins. v. Pompano Park, 369 So. 2d 938 (Fla. 1979) the Court also stated that courts may not write terms and conditions into policies that do not exist in the plain language.

These cases may be Florida-centric, but you’ll find counterparts to these cases in just about every state in the country. That is because policies are really contracts, and it is standard under existing law in the United States that contracts are read by their plain and everyday language. In addition, “blue-penciling” (legal jargon for courts crossing out or writing in language in a contract) is almost universally disfavored. As such, the plain policy language controls its terms and conditions, including, but not limited to, post-loss obligations and EUO clauses.

Now I know what many people reading this blog are thinking, “Policy language? Who wants to read the policy language?” And I empathize and agree; reading insurance policies is not fun. If it was there would be a section down at the local Borders entitled, “Insurance Policies,” where they could be purchased for non-fiction reading. But I implore all industry professionals out there: READ THE POLICY. There is a plethora of useful information in the text, and it is amazing how many times insurance companies demand actions which are beyond the language of their policies.

Most residential policies say something along the lines of: “You must sit for an examination under oath at our request outside the presence of any other insured, and sign the same.” Additionally, the definition section of most residential policies defines “you” as, “Any named insured and the spouse of any named insured residing at the resident premises.” That’s pretty clear. That is, if the policy has this language, or a reasonable facsimile thereof, only named insured and the husband/wife of a named insured living at the insured residence may be forced by the insurer to submit to an EUO. No sons, no daughters, no aunts, no uncles, no public adjusters, not your friend Eddie who dropped the pan-full of water on the floor and chipped the tile: just the named insured and spouse of the named insured residing at the residence premises. Period.

With that being said, however, some policies are a little trickier. For example, I’ve seen State Farm residential policies which say that if the policyholder is going to rely on or defer to employee’s or expert’s opinions, the policyholder must assist the insurer in producing those employees or experts for EUO as well. Thus, if the insured is going to point to their public adjuster and/or the estimate produced when questioned about the damage or valuation of damage, for example, under this policy language, then the public adjuster would have to be sworn in answer questions as well. Of course, in this scenario, I argue that under the policy’s plain language, the PA need only answer questions in the area(s) in which the policyholder has deferred to the PA. Further, since the PA is not an insured, the insurer has no right to demand that the insured and PA be separated for questioning. This usually drives defense attorneys crazy, but I tell them, “YOUR CLIENT wrote the policy!”

Furthermore, some Royal Palm policies specifically include the right of the insurer to demand the PA’s EUO. Moreover, many commercial policies say: “The insurer has the right to examine any insured under oath, outside the presence of any other insured, as many times as they reasonably require.” Thus, any insured, as defined by the policy, in this instance may be called for EUO. The moral to this story is: read the policy language. It will tell you who may be compelled to submit to an EUO and, often times, it can stop the insurer that is simply asking for its policyholders and their agents to jump through imaginary hoops which do not exist in the policy’s plain language. Of course, if insurers do demand actions of the policyholders not stated in the policy, there is insurance jargon term for that, too: Bad Faith.

Tune in next week insurance fans when we discuss Under What Circumstances Can a Policyholder Refuse to Answer a Question at an Examination Under Oath and Not Lose Policy Benefits?