Examination Under Oath – Insurance

A policyholder in Dallas, Fort Worth, Grand Prairie, Arlington, Crowley, Addison, Mesquite, Garland, Carrollton, Richardson, Mansfield, Rendon, or anywhere else in Texas who has a policy of insurance will probably find a provision in that insurance policy that they submit to an examination under oath if the insurance company requests one. Most people might have an idea what that means, but are not positive.
An examination under oath is not a situation where an insurance adjuster talks to you on the phone and asks you for permission to record the interview. The recorded phone interview is requested on almost all claims that are filed. The insurance adjuster likes to get a recorded version of what you are claiming before you have a lot of time to think about what you are saying and before you have a chance to get “lawyered up.” This recorded phone interview is usually completed within a few days of making the claim and in some cases on the same day. The adjuster asks a bunch of questions about whatever the incident is that you are reporting and then based on what you have told them, they begin conducting an independent investigation. The reality is that in most cases the recorded statement does not really hurt the insured’s claim. The problem of course is in the cases where it does hurt. And also, rarely, will the insured know that what seems like innocent statements, can be used as justification for denying the claim or limiting the value of the claim. What is important to know is that a person does not have to agree to a recorded interview.
The examination under oath is a serious matter. When this is being conducted, the insurance company is usually looking for justification for denying the claim. This examination under oath is usually carried out by an attorney who is hired by the insurance company. It usually takes place in the lawyers office. You are usually invited to attend by certified and regular mail. The examination under oath is recorded by a certified court reporter who places you under oath “to tell the truth – the whole truth – and nothing but the truth”, or something to that effect.
If the insurance contract provides for this examination under oath, and it usually does, it becomes a condition of the policy which must be satisfied before the insurance company becomes liable on the policy. The purpose of the examination under oath was described in 1921, by the Texas Commission of Appeals, the Court that existed before the Texas Supreme Court, in the case, Humphrey v. National Fire Insurance Company of Hartford., who stated:
“The insured agrees, at reasonable times and places, as often as required, to submit to examination by agent of insurer, and to submit all relevant books of account, bills, invoices, vouchers, etc. It is clear that the chief purpose of this priviledge to the insurer is the ascertainment and adjustment of the loss which has already occurred. The insurance company, in its policy, evidences in many ways its desire to avoid the necessity of litigation in the settlement of its losses. It reserves the right to have the benefit of the examination provided for before suit can be sustained.”
Abatement of the suit is the proper means to enforce such a clause.
The Humphrey case was cited in 1989, by the Beaumont Court of Appeals in the case, State Farm General Insurance Company v. Honorable Monte D. Lawlis.
This case was what is called an “original petition for writ of mandamus.” Judge Lawlis had refused to order an abatement of the underlieing lawsuit until an examination under oath could be completed.
A lawsuit had been filed against State Farm by its insureds, Mr. and Mrs. Caldwell, alleging State Farm failed to pay under the terms of their homeowners policy after the structure was destroyed by fire, and alleging bad faith settlement practices. State Farm alleged the policy contained express conditions precedent to recovery regarding production of records and submission of the insured to examination under oath. State Farm alleged the examination had been requested and scheduled on numerous occasions and that the Caldwell’s attorney had cancelled the examinations. The Caldwells contend they have substantially complied with the policy requirement by submitting Mr. Caldwell to a four hour recorded interview with State Farm’s adjuster. The interview was neither sworn nor subscribed.
The insurance policy provisions read as follows: “If loss occurs … the Insured shall … if requested by the Company, submit to examination under oath and subscribe the same.” The policy further states: “No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with ….”
The end result was the appeals court ordered the trial court to abate the lawsuit until the Caldwells had complied with the examination under oath provisions of the insurance policy.
When someone finds themselves in a position where an examination under oath is being requested by an insurance company, it is advisable that the advise of an experienced Insurance Law Attorney be obtained.