While working on a case for recovery after hail pummeled a homeowner’s roof, I found a recent case that discussed Texas law regarding Examinations Under Oath (EUO). In this case, the insurer demanded that the EUO be videotaped. When the insured refused to submit to a videotaped EUO, the issue of failing to comply with conditions precedent arose. It was clear in the insurance policy that “no suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity until after full compliance by the insured with all the foregoing requirements, nor unless commenced within two years after the [event].”

There are a number of cases in Texas where the insured refused for various reasons to submit to a EUO. One case in particular stands out. In Shafighi v. Texas Farmers Insurance Company,1 the insured lived in California and it was too inconvenient to fly to Texas for the examination. The insured requested the examination be done telephonically, but the insurer objected and denied recovery based on failure to comply with policy terms. On appeal from a summary judgment in favor of the insurer, the Texas appellate court reversed and remanded the case back to the district court. The Court viewed the insurance policy as an ordinary contact and construed the language using ordinary rules of contract interpretation. The Court concluded abatement is the only remedy for the insured’s failure to comply with a EUO.

The Shafighi Court also determined that when an inadequate proof of loss was submitted by the insured, recovery is not precluded. The Court used the same ordinary interpretation of the policy terms and decided the proof-of-loss “duty” appears in the same contract section as the examination-under-oath “duty” so the only consequence of breaching either duty is abatement of the suit.

In case after case, Texas courts have interpreted policy provisions to mean that if the insured refuses to submit to the examination, he only delays the time when he can recover on his policy. However, it is important to analyze the reasons why another Texas court ruled conversely. The policy language is crucial to the analysis. Notably, in Perrotta v. Farmers Insurance Exchange,2 the Court precluded the insured from maintaining suit for breach of contract and affirmed summary judgment for the insurer. In Perrotta, there was no mention of a “no-suit-until” or “no-suit-unless” provision like the one in Shafighi and our insured’s policy. Whether the language was over-looked by the parties, or, whether it was simply left out, the Perrotta Court relied on the policy language and precluded the insured from maintaining the suit. Citing Clemons v. State Farm Fire and Casualty Company,3 the Court held when the language of the insurance policy is unambiguous, it is the court’s duty to give the words used their plain meaning. Using the Clemons analysis,4 the Perrotta Court determined the policy unambiguously required the insured to submit to an EUO and sign and swear to it. So Perrotta was barred from recovery for failing to comply with the specific terms of the policy.

When assisting our clients with recovery, we look at the policy terms in full to determine whether the insurer’s demands are in line with the insured’s rights. It is important to give the insured proper guidance when counseling them on whether and when to comply with a request for EUO and demand for sworn proof-of-loss. In Texas, policy language inclusions are just as important as omissions when it comes to recovery.

1 Shafighi v. Texas Farmers Ins. Co., 2013 WL 1803609 (Tex. App. – Houston [14th Dist.] April 30, 2013).
2 Perrotta v. Farmers Insurance Exchange, 47 S.W.3d 569 (Tex.App. – Houston [1st Dist.} 2001, no pet.).
3 Clemons v. State Farm Fire and Cas. Co., 879 S.W.2d 385, 391 (Tex.App. – Houston [14th Dist.] 1994, no writ).
4 Clemons, 879 S.W.2d at 39.