Insurance Policy Conditions (a/k/a/ Land Mines): Part 28 - An Insurer's Exercising Conditions When There Is No Claim??? Huh??
I recently encountered something rather bizarre – an insurance company trying to conduct Examinations Under Oath (“EUO”) despite there being no pending claim. The carrier denied the claim several months ago. A few months after the first claim denial, and after supposedly entertaining more information from the insured, the insurer ratified the denial. A few months after the second denial, and seemingly for the heck of it, the carrier decided to send another letter to the insured ratifying its second denial. A few months after that, a carrier-retained attorney emerged from out of the blue demanding EUOs. EUOs? For what?
I asked the carrier’s counsel to explain (and provide authority supporting) the carrier’s contention that it is entitled to conduct a claim adjustment / investigation when there is no pending or open claim. The carrier’s counsel, of course, was unable to provide an explanation beyond “because the insurance company says so.” That is because there is no legal, practical, logical, or common sense explanation.
Last time I checked, the bulk of insurance policy conditions, including the EUO condition, are intended as claim adjustment / investigation tools. There is no pending or open claim (in the eyes of the insurance company) after the insurance company has made its claim decision. An insured does not have to submit to a willy-nilly claim adjustment / investigation when there is no pending or open claim.
Quite often, a carrier’s claim denial constitutes a breach of contract. As discussed in a few prior posts in this blog series, once the carrier breaches, it is my opinion the policyholder is no longer obliged to submit to the carrier’s adjustment and investigation whims. Once the carrier breaches, it is time to stop messing around and to take the claim to the next level: mediation, appraisal, litigation.
To read previous posts in my series on insurance policy conditions, click here.