It is a little known fact that many – if not all –homeowner’s insurance policies include provisions requiring the policyholder to comply with certain conditions prior to filing suit against the carrier. These requirements typically include submitting documents, submitting proof of other insurance, making your damaged property available for inspection, and submitting to an examination under oath.
What is an examination under oath, you ask? Well, it is essentially a one-sided deposition where the carrier gets the opportunity to ask the policyholder anything it wants, while the policyholder is under oath. The policyholder can have an attorney present, but that attorney is essentially powerless because she/he is unable to object to any of the carrier’s questions, other than those affecting some form of privilege (e.g. attorney-client privilege). Moreover, the carrier later gets a second bite at the apple during litigation, when it gets the opportunity to depose the policyholder. Sounds fair, right?
Regardless, time and time again, the courts have held that litigation cannot proceed without the policyholder submitting to an examination under oath. For example, on April 11, 2011, Judge Hoyt from the Houston Division of the United States District Court for the Southern District of Texas ruled that Texas law is on the carrier’s side when it comes to examinations under oath.
In Rossco Holdings, Inc. v. Lexington Insurance Co., No. H-09-CV-04047, 2011 WL 1363799 (S.D. Tex. April 11, 2011), the carrier moved for summary judgment based on its allegations that the policyholder had failed to comply with the pre-suit conditions of the policy. Specifically, the carrier alleged that the policyholder had failed to: (1) submit documentation requested by the carrier; and (2) submit to an examination under oath. After hearing the arguments from both sides, Judge Hoyt stated that:
Given the express language of the policy at issue, the Court agrees that Lexington is well within its right to enforce the conditions precedent to coverage in this case, i.e., requesting the production of certain documents and/or requiring the insured to submit to an [examination under oath], nevertheless, it declines to conclude, at this juncture, that Lexington is entitled to summary judgment … .
The Court further reasoned that, “it is well-settled law in Texas that abatement rather than exclusion or barring of a claim is the insurer’s appropriate remedy for enforcement of an insured’s conditions precedent to coverage.” In practice, what this means to you – the policyholder – is that every effort must be made to comply with the policy’s requirements in the event of a loss. Otherwise, you risk delay and a fight over whether your case can proceed.