September 19, 2021

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What Are Typical Examination Under Oath Questions Asked About a Fire Loss?

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Policyholders being asked to take an examination under oath should hire experienced property insurance lawyers. This is especially true when an insurance company is suggesting that a fire is suspicious or intentionally set. Merlin Law Group has collected numerous typical questions asked by insurance company attorneys. Policyholders should know what questions are going to be asked in advance before going to the examination under oath.

As indicated in Attend the Requested Examination Under Oath!:

An insurance company may have the right to examine its insured under oath in connection with its investigation and evaluation of an insurance claim. Most insurance policies impose an obligation on the insured to cooperate with the post-loss investigation. An insured’s failure or refusal to comply with an obligation to cooperate by submitting to an examination under oath (“EUO”) may preclude recovery against the insurance company.

Since policyholders are usually not going to escape this requirement, the next question is how to prepare for it and understand that the insurance company is not just doing this as an exercise but looking for a formal excuse not to pay a claim. The warnings in our earlier blog post, Typical Questions Asked During an Examination or Sworn Statement Under Oath of a Disputed Structural or Personal Property Valuation Claim Suspected of Being Inflated, Exaggerated or Made Up, should be read carefully:

The carrier will use these documents, the facts garnered through investigating the claim, and responses in the EUO in trying to narrow the perceived fraud down to one of three explanations: outright over-inflation of the claim in scope or pricing, a failure to mitigate causing damage to worsen, or the policyholder trying to include areas with uncovered damages or areas where the insured is renovating the home.

If the carrier believes the claim to be black-letter fraud their questions will focus on several areas, including the insured’s finances. You can expect them to ask for tax returns, monthly debt invoices, loan documents, credit card account summaries, and like items. Rest assured, a good fraud attorney will ask the policyholder to outline their monthly/yearly income as compared to their debts, with a deficit showing financial distress, hence a motive to commit insurance fraud.

The carrier will also ask questions about prior insurance claims in order to see if there were areas of damage from a previous claim which were not completely repaired and for which the insured is seeking double recovery. In this situation, if the policyholder does not have proof of the prior repairs this presents a serious problem, as it really bolsters the carrier’s position. Further, the carrier will ask questions and seek documents about all previous insurance claims filed by the insured. As likely as it is that any good person may suffer a covered loss, it is substantially unlikely that one good person will suffer multiple insurance losses. Believe it or not, there are people out there who are serial insurance claim frauds who look upon policies as contracts for supplemental income. Similar to the serial claim frauds are the people who have a loss and attempt to expand its scope in order to renovate a kitchen or bathroom, for example. All public adjusters and attorneys should take a truly skeptical eye to a claim were the damage overlapped areas of renovation or where the scope of the loss appears overreaching. Policyholders should know that while some contractor may give them a wink and a nod about including an undamaged bathroom in the scope of his work with an eye toward the insurer subsidizing that work, at the end of the day it’s the policyholder on the hook for that fraud. Thus, all policyholders should be able to readily answer questions as to when renovations began, when completed, and proof of payments made in order not to fall under the jaundiced eye of fraud.

The final corral in to which the carrier may attempt to wrangle alleged fraud is through failure to mitigate. While a failure to mitigate is truly not fraud –unless the insured lied about making repairs or when the repairs were effectuated– it is certainly fraud’s ugly step-sister. That is, often when the carrier cannot quite prove the fraud charge, it may diminish its liability by demonstrating that the insured failed to make proper temporary repairs in order to prevent the damage from worsening, which, of course, is a post-loss obligation of every property insurance policy.

Please make certain that answers to questions about contents and business personal property claim are accurate. Many insurance company training manuals now stress that it is easier to prove fraud in the submittal of the contents claims. Most policyholders do not know the history and value of all of their personal property and inventory. If it is burned to ash, memories are often wrong. The number of, age, value, and condition of many personal property items are often “best guesses” that if wrong, insurance company adjusters or their attorneys will claim constitute fraud. Be careful with contents claims submittals. This is not a new trend but one we warned about seven years ago in, Misrepresentation of Personal Property Claims Can Cost. . . BIG:

One of the trickiest parts of property insurance claims is the contents portion of the claims. Even if the insured saved receipts to prove the age and cost of personal property, those receipts are often stored in the same general place as the personal property and suffer the same fate as the personal property. Accordingly, policy holders and public adjusters are often left to estimate age and costs of personal property. This often leads to a great deal of litigation between policyholders and their insurance carrier.

The bottom line is when presenting a claim for contents damage or theft, it is imperative that the claim be accurate and verifiable. It is far better to leave questionable items out of a claim than to face an allegation of fraud. To do otherwise is to play with fire….

To help policyholders, I am attaching an insurance company information sheet with some of the areas of questions in a typical examination under oath.1 If you are going to an examination under oath, hire a law firm that has been to numerous examinations under oath and has all the questions for you to review in advance.

Thought For The Day

Rather fail with honor than succeed by fraud.
—Sophocles

Song For The Day

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1 Client Information Form – Fire Cases (Taken from insurance company EUO exam format).

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