All insurance policies place certain obligations on the insured in the event of a loss. While most policyholders do not understand all of the terms and conditions of their policy, these post-loss obligations are extremely important. Failing to fulfill these obligations may be grounds for an insurer to deny an otherwise valid claim in some circumstances; therefore, all board members should read and understand what to do after a loss occurs.
One of the most daunting tasks faced by associations is the insurer’s request for an examination under oath (EUO). An EUO is a creature of contract, thus, if there is no provision in the policy requiring an insured to sit for an examination, there is likely no obligation to do so. While it is extremely rare to find a policy that does not have such a requirement, an insured should always check before agreeing to a carriers’ request.
Most requests for an EUO come with a long list of general areas that the carrier wishes the insured to testify to. With a simple homeowner claim, determining who should be designated (if the request does not cover all of the individual homeowners) is pretty simple. For associations, however, the task of designating the person most knowledgeable about each area becomes more confusing.
Often, the requests center on the person most knowledgeable about current damages and previous repairs and construction projects. Due to the fact that many associations change boards quite frequently, there may be no current board members who have knowledge of both the current damages and previous repairs. This may lead to a situation where the board must designate more than one individual to testify to the areas requested.
Once an individual is identified as the person most knowledgeable about a certain area of inquiry, it is important to understand the basics of an EUO. First, attendance at the EUO should be taken very seriously. An insured’s refusal to submit to an examination under oath has been found to be a material breach of the insurance contract in some instances. Stringer v. Fireman’s Fund Insurance Company, 622 So.2d 145 (Fla. 3rd DCA 1993).
Second, it is important to remember that this examination is conducted under oath and will be transcribed by a licensed court reporter. Anyone sitting for an examination under oath should be careful to answer every question honestly and to the best of their ability. One problem frequently encountered is that some individuals are afraid to admit that the do not remember something that is asked. Before every EUO, I remind my client that “I don’t know” is not a bad answer if it is truthful. If you don’t understand a question, ask the individual to repeat it. If you think that the correct answer may hurt your claim, don’t attempt to hide anything. While the truth may cause problems for your claim, there are things far worse than having a claim completely denied because of an insurer’s assertions of misrepresentation or fraud. That is an uphill battle that many times could have been avoided.
Finally, anyone sitting for a EUO should remember that while it is not a “legal proceeding,” it is about as close as you can get. The insurance company’s representative asking the questions will undoubtedly be an attorney, and you should plan for some tough questions. I never recommend that anyone sit for an EUO without their own legal representation there as well. While there are very limited instances where an attorney can jump in during an examination, having someone there to protect your rights is extremely important. When choosing an attorney for this process, it is important to pick someone who is experienced with examinations under oath. Because the rules of an examination under oath and a deposition are very different, the best way to protect yourself and your association is to find a well versed insurance attorney to accompany you.