The Sixth Circuit Court of Appeals (federal court system) has ruled that an insurance carrier need not provide an insured with any of its investigation prior to the taking of an examination under oath. Many times, the insureds or their counsel, will request certain documentation from the file before the examination under oath is taken. The Sixth Circuit has addressed these questions in the recent case of Lester v. Allstate Property and Casualty Insurance Company, Case No. 13-6070 (appealed from the United States District Court for the Eastern District of Tennessee at Knoxville)(download PDF here).
In that case, Allstate demanded an examination Under Oath, and the insured responded by stating that she and her husband would submit to the examination only if Allstate first showed them its investigative file. The 6th Circuit held that the insurance company is not required to turn over its files prior to taking an EUO, and the insured’s refusal to submit to the Examination without having the opportunity to review the claim file materials was a breach of the policy and warranted denial of the claim. The seminal language appears at p.2-3 of the opinion:
The point of an examination is to allow insurance companies to sort out fraudulent claims from honest ones, exorbitant claims from accurate ones. Telling the policyholder what the investigation has already uncovered undermines that purpose, as it would allow the policyholder to tailor her answers to the facts already discovered by the company. Suppose the insurance investigator suspects arson. And suppose his investigation uncovered a potential source of the arson or disclosed that the policyholder had moved some items out of the house shortly before the fire. That is useful information, particularly for a policyholder suspected of fraud. Alerted to these suspicions, the policyholder could shape her answers accordingly.
This seems to me to be the most fair and equitable resolution. It allows the carrier to gather the most competent, impartial and truthful information.