An Examination Under Oath (EUO) is a formal procedure insurance companies use to gather information about a claim under a property insurance policy. During an EUO, the insured policyholder is questioned by a representative of the insurance company, typically a lawyer, while under oath to tell the truth. This means that the insured swears to provide truthful answers during the questioning. The EUO is usually conducted in the presence of a court reporter who records all questions and answers, and a transcript is prepared afterward. The policyholder has the right to be accompanied by an attorney, who can help prepare for the EUO and provide representation during the proceeding.

The purpose of an EUO is to secure all relevant facts of a loss. It is often used as a tool for insurance companies to screen out fraudulent claims, test the credibility of the insured, and otherwise confirm facts needed to make coverage and valuation determinations.

If an insured refuses to participate in an EUO or fails to answer questions truthfully, it can lead to the denial of the claim or dismissal of any lawsuit trying to force the insurance company to pay for benefits. The insurance company has the right to request an EUO as part of the policy conditions, and failure to comply can be considered a breach of the insurance contract.

Over 150 years ago, the United States Supreme Court noted the purpose of the examination under oath:1

The object of the provisions in the policies of insurance, requiring the assured to submit himself to an examination under oath, to be reduced to writing, was to enable the company to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to the facts, material to their rights, to enable them to decide upon their obligations, and to protect them against false claims.

The historical basis for the Examination Under Oath was further discussed in “Examinations and Sworn Statements Under Oath: What Are They and Their Relevance to Insurance Coverage From a Historical Study of Older Cases.”

A recent example of policyholders potentially losing all benefits under an insurance policy is from a case out of Ohio. The insurance company argued that the policyholders’ lawsuit should be dismissed:

Plaintiffs’ allegations of ‘foot dragging’ and ‘intentional delay’ defy the most basic notions of good faith and fair dealing. Allstate repeatedly and continuously requested documents and EUO testimony from the Plaintiffs in the multiple letters and emails Allstate’s counsel sent between October 4, 2022 and December 28, 2022. Plaintiffs never responded to the EUO requests and Plaintiffs never produced a single document until after filing suit. The pleadings demonstrate it was Plaintiffs who dragged their feet and stonewalled Allstate’s investigation, and it was Plaintiffs who intentionally delayed the claim investigation.

In light of the fact that Plaintiffs did not produce documents until after filing suit, and given Plaintiffs’ admitted refusal to submit to EUOs, Plaintiffs’ cannot reasonably maintain that Allstate acted in bad faith by ‘not indemnifying’ them. Again, the Policy cannot obligate Allstate to provide coverage because Plaintiffs failed to satisfy the mandatory EUO condition precedent and Plaintiffs had no right to initiate this action because of their failure to ‘fully comply with all Policy terms.’2

The trial court agreed and dismissed the lawsuit without prejudice, noting:

The simplest path (which, regrettably, the Dawsons have not chosen) is for the Dawsons to sit for an EUO. Then, assuming no other provision or exclusion kicks in, Allstate’s duty to cover would presumably be due. Alternatively, the Dawsons could say that Allstate’s request for an EUO was unreasonable (meaning the Dawsons’ duty to sit for one did not arise and consequently Allstate’s duty to cover is due). Or, lastly, the Dawsons could argue that Allstate was not prejudiced by their refusal (meaning that regardless whether its request for an EUO was reasonable, Allstate’s duty to cover is not suspended and is now due).

But the Dawsons’ allegations fail to render any of these possible routes plausible. The Dawsons’ factual allegations do not give rise to a reasonable inference that Allstate’s request for an EUO was unreasonable. True, they allege that ‘Allstate’s demand for an EUO was not based on any good faith investigation into the Dawsons’ claim’ and that it was ‘intended to intimidate the Dawsons and [to] delay the ultimate resolution of the claim.’ But that is nothing more than a ‘naked assertion’ of fact about Allstate’s intent….As the Sixth Circuit has observed, when ‘[p]laintiffs present nothing more than unadorned allegations concerning Defendants’ intent and motivation[,] … [t]hese vague and conclusory allegations of nefarious intent … are not well-pleaded.’…The Dawsons do not allege any concrete, non-conclusory facts from which the Court can reasonably infer that Allstate’s motive for seeking an EUO was nefarious or that its request was unreasonable. They simply assert that it was so. That is not enough to clear the plausibility hurdle. Indeed, on the allegations here, the Court concludes that it is highly likely that Allstate’s request was reasonable. After all, the Dawsons had purchased insurance only two months prior to submitting a claim for over $1 million in allegedly covered losses resulting from a fire. Common sense…suggests that Allstate may have some questions about that fire and the Dawsons’ losses.

…But Allstate requested, and the Dawsons declined to sit for, an EUO before that time, which means that the Allstate’s duty to cover the loss (and, conterminously, pay for additional living expenses) has not yet arisen. Therefore, Allstate did not breach that provision, let alone materially breach it.3

I previously warned about policyholders not participating and answering questions as well as hiring the wrong attorney in “Not Answering Questions At Examination Under Oath Results In No Recovery.” Policyholders should carefully prepare for and select an experienced, highly regarded law firm to help them through an examination under oath, as discussed in “How to Prepare for an Examination or Sworn Statement Under Oath if You are a Policyholder or Public Adjuster” and “What Are Typical Examination Under Oath Questions Asked About a Fire Loss?” As noted in “The Importance of Examinations Under Oath,” an article I wrote ten years ago, “it has been my experience that a well-prepared policyholder always presents as a more confident, credible witness.”

Thought For The Day

A man who is his own lawyer has a fool for a client.

—Proverb often attributed to Abraham Lincoln

1 Claflin v. Commonwealth Ins. Co., 110 U.S. 81 (1884).

2 See Dawson v. Allstate Vehicle & Prop. Ins. Co., No. 1:22-CV-776, Doc # 17 [Defendant Motion for Judgment on the Pleadings] (S.D. Ohio).

3 Dawson v. Allstate Vehicle & Prop. Ins. Co., No. 1:22-CV-776, 2024 WL 22735, at *4 (S.D. Ohio Jan. 2, 2024).