Requirement Of An Examination Under Oath (EUO)

Someone in Grand Prairie, Arlington, Hurst, Euless, Bedford, Grapevine, Keller, Saginaw, Roanoke, Fort Worth, or anywhere else in Tarrant County might ask, “Why do I have to submit to an examination under oath?” Here is a case that might shed some light to that question.
The case is styled, Shannon Trahan and Joleen Trahan Woods v. Fire Insurance Exchange and Texas Farmers Insurance. The opinion in this case was issued in 2005, by the Beaumont Court of Appeals. This case is an appeal from a summary judgment rendered in favor of Fire Insurance Exchange (FIE) and Texas Farmers Insurance (TFI). This court upheld the summary judgment.
As some background, on December 31, 2000, the Trahan’s home and automobile were destroyed in a fire. The Trahans filed a fire loss claim. On February 8, 2001, they signed a Proof of Loss form. On February 14, 2001, FIE requested the Trahans submit to examinations under oath (EUOs). Finally, on August 29, 2001, the Trahans submitted to the EUOs, and they were signed and sworn to on September 20, 2001. On October 8, 2001, FIE accepted the Trahans fire loss claim and issued checks.
The Trahans sued for various violations of the Texas Insurance Code alleging they were wrongly subjected to the EUO since there was no evidence they had committed an arson. In examining this case, the court reviewed the policy which read:
Agreement We will provide the insurance described in this policy in return for the premium and compliance with all applicable provisions of this policy.
SECTION I — CONDITIONS 3. Duties After Loss.
a. Your Duties After Loss. In case of a loss to covered property caused by a peril insured against, you must:
(5) as often as we reasonably require:
(b) provide us with pertinent records and documents we request and permit us to make copies.
(c) submit to examination under oath and sign and swear to it.
The policy language after the above stated the responsibilities of the insurance company and their time for payment.
The Trahans asserted that FIE was delaying payment based on suspicion of arson. Since there was not any proof of arson, the Trahans asserted the EUO’s were not necessary or justified.
The law in this area is clear. The conditions under which an insurance company may conduct an EUO are governed by the insurance contract. As the Texas Supreme Court has stated, “For an event to constitute a ‘condition precedent’ under a contract, the contract must provide that the event ‘must happen or be performed before a right can accrue to enforce an obligation.'”
In discussion the court pointed out that the policy imposed on the Trahans a duty to “submit to an examination under oath and sign and swear to it” upon request. Insurance policy provisions requiring an insured to submit to an EUO as a condition precedent are valid. Thus, FIE’s request that the Trahans submit to EUOs invoked the conditions of the policy and were a valid request.
The demand by an insurance company for an insured to submit to an EUO is a red flag that should cause an insured to immediately seek the advice of an experienced Insurance Law Attorney. This is not something that is normally called for on all cases and when they are asking for an EUO it is normally the first step towards denying the claim. In the case written about here, the insurance company paid the claim after the EUO, but this is not the norm.
There are lots of things someone can say without realizing that they are hurting their case. Most people thing they can “just be honest” and everything will be okay. That sounds good but unfortunately is not always the case. Plus, even though the insurance company has a right to ask for the EUO, that does not mean they can ask anything they want to ask. This of course is where an attorney comes in to help.