Property Insurance 101: Everything You Always Wanted to Know About Examinations Under Oath - But Were Afraid to Ask!


...during which an insured is orally questioned by a representative of the insurer, usually counsel, under oath and in the presence of a court reporter regarding matters relating to the loss, the claim and the insurance. The insurer’s EUO demand raises a host of questions concerning the nature and the extent of an insured’s duty to submit to an EUO and the consequence of non-compliance. This article will address those questions.

What is the Purpose of an EUO?

An EUO enables the insurer “to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to the facts, material to its rights, to enable it to decide upon its obligations, and to protect it against false claims.”

Insurers use EUOs to investigate suspicious or questionable claims that have a higher possibility of being fraudulent. The EUO request often comes after the claim has been referred to the insurer’s special investigative unit, or “SIU,” for further investigation. SIU claim representatives are trained to look for suspicious loss indicators that have been associated with fraudulent claims. These indicators or “red flags” enumerated by the insurance industry include: loss reported as suspect by an informant or the authorities; an incendiary or arson fire; pending mortgage foreclosure/default; loss occurring just after coverage takes effect, just before it ceases, or just after it has been increased; insured contacts agent prior to a loss to verify coverage or the extent of coverage; building for sale at the time of loss; misrepresentation as to the claimed value of the loss or damage; inconsistent loss facts; and insured behavior such as insisting on early settlement, avoiding mail or facsimile, or willing to negotiate rather than substantiate the claim.

Insurers also use EUOs to investigate coverage- related issues, including: misrepresentation in the procurement of the insurance; relationship between insureds; mortgagee and other creditor rights; nature and extent of insurable interest; late notice of loss; residency, vacancy or occupancy of insured property; increase in hazard; and compliance with warranty and protective safeguard endorsements.

And, insurers use EUOs to investigate potential third- party liability for a loss and their right of subrogation.

Does an EUO Differ from a Deposition?

All too often, lawyers agree to represent an insured at an EUO on the mistaken belief it is no different than representing a party at a deposition. Despite their similarity as sworn oral testimony taken before trial, depositions and EUOs are different in the following respects.

Insurers use EUOs to investigate suspicious or questionable claims that have a higher possibility of being fraudulent … coverage-related issues … [and] potential third-party liability for a loss and their right of subrogation.