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CONDUCTING THE EXAMINATION UNDER OATH
Following the submission of a notice of claim, an insured must take, or refrain from taking, certain actions in order to preserve their right to coverage under the policy. Liability insurance policies generally contain a requirement that the insured cooperate with the insurance company in its investigation, defense, settlement, or other handling of a claim against the insured. Cooperation with the insurance company, therefore, is one of the conditions to obtaining coverage under a liability policy.
Such clauses generally provide the following:
The insured shall cooperate with the company and, upon the company’s request, assist in making settlements, in the conduction of lawsuits and in enforcing any right of contribution or indemnity against any person or organization who may be liable to the insured because of bodily injury, property damage, or loss with respect to which insurance is afforded under this policy.
The insured shall attend hearings and trials, assist in the securing and giving of evidence, and assist in discovering witnesses to testify.
The insured shall not, except at his own expense, voluntarily make any payment, assume any
obligation, or incur any expense, other than for immediate medical and surgical relief for others that may be imperative at the time of the accident.
Courts rarely allow an insurer to deny coverage based on the insured individual’s failure to cooperate. Violations of the cooperation requirement have to be substantial and material in order to affect coverage. Additionally, in order to avoid coverage on the grounds of lack of cooperation the insurer must:
Demonstrate that it acted diligently in seeking to bring about the insured’s cooperation.
Show that its efforts were reasonably calculated to obtain the insured’s cooperation.
Show that the attitude of the insured, after his cooperation was sought, was one of “willful and avowed obstruction.”
Thus, the courts have interpreted a “due diligence” requirement on the part of the insurer into the cooperation clause, refusing to allow forfeiture of coverage unless the insurer can show that they made reasonable efforts to obtain the cooperation of the insured.
The non-cooperation defense is often further limited in claims involving compulsory liability insurance (e.g., automobile liability insurance required by a state financial responsibility statue). Many courts have held that in light of the statute mandating coverage for the benefit of third-party claimants, the insurer
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may not avoid its obligation to the intended beneficiaries of the law merely because its own insured failed to cooperate. This, of course, presumes there has been no collusion between the insured and the third party. If the insurer can prove collusion, it should be relieved of its duty to defend and indemnify. Duties After Loss
The insurance policy specifically states in the section entitled “Your Duties After Loss” that the insurer must: “Submit to an examination under oath, while not in the presence of any other insured, and sign the same.” This allows the investor to separately take sworn testimony from each spouse or any other insured on the policy separately. All examinations under oaths (EUOs) regarding the loss should be scheduled for the same day (if possible) with a short break in between. This prohibits one insured from “pumping” the other to see what he or she said in regard to the loss itself.
SECTION I – CONDITIONS
1. Insurable interest and limit of liability – Even if more than one person has an insurable interest in the property covered, we will not be liable in any one loss:
a. To the insured for more than the amount of the insured’s interest at the time of loss; or b. For more than the applicable limit of liability.
2. Your duties after loss – In case of a loss to covered property, you must see that the following are done: c. Give prompt notice to us or our agent;
d. Notify the police in case of loss by theft;
e. Notify the credit card or fund transfer card company in case of loss under credit card or fund transfer card coverage;
f. Protect the property from further damage; If repairs to the property are required, you must: – Make reasonable and necessary repairs to protect the property; and
– Keep an accurate record of repair expenses.
g. Prepare an inventory of damaged personal property showing the quantity, description, actual cash value, and amount of loss. Attach all bills, receipts, and related documents that justify the figures in the inventory; h. As often as we reasonably require:
– Show the damaged property;
– Provide us with records and documents we request and permit us to make copies; and
– Submit to examination under oath, while not in the presence of any other insured, and sign the same; i. Send to us, within 60 days after our request, your signed, sworn proof of loss which sets forth, to the best of
your knowledge and belief: – The time and cause of loss;
Conducting the Examination Under Oath
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– The other insurance that may cover the loss;
– Changes in title or occupancy of the property during the term of the policy; – Specifications of damaged buildings and detailed repair estimates; – The inventory of damaged personal property described in 2e above;
– Receipts for additional living expenses incurred and records that support the fair rental value loss; and – Evidence or affidavit that supports a claim under the credit card, fund transfer card, forgery and
counterfeit money coverage, stating the amount and cause of loss. j. Cooperate with us in the investigation of settlement of the claim.