If you’re reading this blog, chances are you (or someone you represent) has been requested to submit to an examination under oath by your insurance company’s attorney.  This process can be intimidating and confusing.  I field a lot of questions from insureds, public insurance adjusters, and attorneys about examinations under oath (“EUOs”).  As a general rule, you need to understand that, although an EUO is not part of a court proceeding, it is taken under oath, so anything you say can (and likely will) become a part of the court’s record if your claim is taken to litigation.  Therefore, it is crucial for you to understand the importance of the EUO in relation to your claims process as well as how the insurance company may utilize it to deny your claim.  Here are some of the most common questions I get asked about EUOs:

  1.  What is an Examination Under Oath? – In the past, insurance companies utilized their own adjusters to conduct EUOs, but due to the legal nature of the questioning and the consequences, EUOs are now almost exclusively conducted attorneys for the insurance company.  You will be asked to bring several documents in support of your claim and you will be asked questions about those documents and specific questions about the loss by the attorney. EUOs are often demanded when there are red flags for fraud, strange circumstances, large claims, potential problems with the application for insurance, etc.  There will be a court reporter present, you will swear to tell the truth, and the lawyer will ask you questions, often for hours.
  1.  Do I have to attend or cooperate with the Examination Under Oath process? Yes.  Your insurance policy has a section that provides you, as the insured, have a duty to cooperate with your insurance company’s investigation, including submitting to an examination under oath.  However, you may not have to answer every question or provide every document – I plan to address the cooperation clause of the insurance policy in more detail in a later blog.  For now, it is important to know that you need to cooperate with your insurance company as your failure to do so may result in the denial of your claim.
  1.  Do I need an attorney on my side?  The short answer is yes. I would advise anyone who has been requested to submit to an EUO to be represented by an attorney experienced with the examination under oath process within the context of first party insurance claims.  An attorney experienced with EUOs can prepare you for the types of questions you will face, assist in the gathering (and presenting) of documentation, streamline and coordinate communication with the insurance company, and assist you in making strategic decisions, all of which can impact whether your claim is paid or denied. If you handle it on your own, you may do irreparable harm to your claim.
  1.  But I’ve already answered an adjuster’s question that he recorded; do I still have to submit to an EUO?  Yes.  This is quite common.  If your claim is being investigated to the degree that you have been requested to submit to an examination under oath, you have likely already been questioned extensively by the special investigator for your insurance company, maybe even more than once.  Often, these questions can give valuable insight to your attorney as to the nature of the red flags that triggered the request for an EUO.
  1.  I didn’t do anything wrong, why am I being investigated?  Insurance companies get thousands of claims a year.  Consequently, they send insurance claims into the examination under oath process for a variety of reasons.  Some reasons are more serious than others and some reasons are legitimate while other reasons seem to be trivial. That is why it is so important to consult with an experienced attorney to be sure you are receiving the best advice possible.  Your claim’s outcome may very well depend on it.


Back in November 2013, I had the great honor to represent Larry and Sue Banks in their case against Cincinnati Insurance Company.  My partner, Clint Scott, and I presented the case to a federal jury and after deliberations, the jury returned a verdict for more than $2.2 million.  The insurance company accused the Banks of burning their house, but the Banks ultimately prevailed.   That is a story for another day, but one of the big legal issues in the case was who had the burden of proving the cause of the fire, the Banks or the insurance company.

In Cincinnati Insurance Co. v. Banks, 610 Fed. Appx. 453 (6th Cir. 2015), the Sixth Circuit answered that question by confirming that the insurance company bears the burden of proving arson.  In the Banks case, the insurance policy insured against “accidental” direct physical loss.  Because the general rule is that the insured bears the burden of proving that he or she comes within the terms of the policy’s coverage, the insurer argued that the Banks had to prove that the fire was accidental.  The problem was that such would require the court to ignore the longstanding principle that an insurer bears the burden of proving arson.  So the Sixth Circuit was faced with the unusual circumstance where two general rules of insurance policy interpretation conflicted.  In deciding the issue, the Sixth Circuit noted that there is a presumption in Tennessee that “the burning of a property is the result of an accidental cause,” and then held (without much discussion at all),  that the trial court properly held that the insurance company had the burden of proving arson and that the Banks did not bear the burden of proving the fire was accidental.  This opinion upholds the longstanding rule of law that the insurance company bears the burden of proving arson, even when the insurance policy seemingly shifts the burden to the insured by limiting its coverage to accidental losses.

A copy of the opinion can be downloaded here.

In the past, I’ve posted a few articles regarding the recent trend of insurers to attempt to deny hail damage claims on the basis that the damage is “cosmetic” rather than “functional.”  Most commonly, the issue arises when there are hail dents to a metal roof and the insurance company denies the claim on the basis that the roof still functions and the damage is only aesthetic.  In the past several years, I’ve had to deal with this issue several times.  This past summer, we finally had an opportunity to get a ruling on this issue from the Davidson County Chancery Court.   In that particular case, Westfield Insurance Company insured a hotel against “direct physical loss,” and hail undisputedly dented the hotel’s metal roof.  When faced with the issue, Chancellor Russell T. Perkins ruled:

Based on the undisputed facts, the Court is asked by [the insured] to rule, as a matter of law, that the hail dents to the metal mansard roof of the Insured Premises constitute direct physical loss or damage under the subject insurance policy.  . . .  The Court concludes as a matter of law that if there are hail dents to the metal mansard roofs, no matter whether they are visible from the ground or visible with or without the aid of chalk, then such dents constitute direct physical loss or damage under the insurance policy and therefore constitute a covered claim under the policy.

Thankfully Chancellor Perkins got it right, but the fight will continue until an appellate court finally issues binding law.  This one has always seemed like a no-brainer to me. Clearly if hail dents a roof, whether it be a car, house, or office building, the dent constitutes “direct physical loss.”   For a copy of the Chancellor Perkins’ opinion, click here.

In the most recent statement by the Commissioner of Insurance regarding insurance companies’ marketshare of homeowners’ policies in Tennessee, it appears that there are two primary players – State Farm and Farm Bureau (Tennessee Farmers Mutual Insurance Company).  State Farm leads the way with a market share of 25%, with Farm Bureau second at 19%.  No other insurer is even close to touching the “big two.” In a distant third place, USAA, Liberty Mutual, Safeco, and Allstate all have around 2-3% each.  For the full breakdown, click here.

Yesterday, the Court of Appeals issued yet another decision concerning when a lawsuit must be filed in order to be timely.  In a well-reasoned and fair opinion authored by Judge Gibson, the Court of Appeals made clear once again that the question of when a claim accrues is fact intensive and requires a knowledge and understanding of all of the subject insurance policy’s provisions, including the immunity clause.  Most importantly, the Court emphasized that in a case requiring submission of a “satisfactory proof of loss,” an insurer would be wise to let the insured know when it deems a proof of loss satisfactory in order to be sure the immunity period begins to run.

In Riggs v. Farmers Mutual of Tennessee, the insurance policy provided that payment would be due 45 days after submission of “a satisfactory proof of loss is received and the amount of the loss has been established by written agreement . . . or the filing of an appraisal award with us.”  The policy also provided that suit must be “commenced within 1 year after the loss.”   The facts reveal that the fire occurred on May 29, 2011, that Riggs provided an executed proof of loss form to the insurer on October 3, 2011, that the insurer conducted an examination under oath of Riggs on November 10, 2011, that the insurer denied the claim on September 24, 2012, and Riggs then filed suit on December 11, 2012.

As a prefatory matter, the Court noted the established rule that suit must be filed within the contractual limitations period following the accrual of the cause of action, not the date of the loss.  When the insurance policy provides a period of immunity in which the insurer cannot be sued, the accrual of the claim occurs upon expiration of the immunity period or when the claim is denied, whichever comes first.  In the Riggs case, the issue was when the immunity period began, which in this case was the 45 day period that the policy allowed the insurer to make payment after submission of a “satisfactory proof of loss.” Riggs claimed the immunity period did not begin until after she fully complied with the insurer’s investigation by examination under oath and re-submission of a completed contents inventory as requested.  On the other hand, the insurer argued that the immunity period began when Riggs sent in her proof of loss form on October 3, 2011.  This, in turn, led to a dispute about what the policy meant when it referred to a “satisfactory proof of loss.”

In a great opinion, the Court ultimately held that the insurer’s position was illogical because it did not stop requesting additional information from Riggs until November 10, 2011.  Accordingly, any “proof of loss” submitted before that time was necessarily not “satisfactory.”  Thus, because suit was filed within one year and 45 days after that date, the suit was timely.

But the Court did not stop there.  Focusing in further on the language requiring that payment be made “within 45 days after a satisfactory proof of loss is received,” the Court noted that because the insurer declined to pay then it necessarily did not consider Riggs’ proof of loss satisfactory.  This circumstance would leave an insurer “with no way of knowing when her proof of loss was satisfactory or when the immunity period began to run.”  So, the clear take-away from this opinion is that submission of a “proof of loss” form may not necessarily be considered submission of a “satisfactory proof of loss,” particularly when the insurer continues to investigate and request information after submission of the form.

You can view the opinion here.

The Court of Appeals recently issued its opinion in Maples v. Tennessee Farmers Mutual Insurance Co., E2015-00285-COA-R3-CV (Tenn. Ct. App. 2015). The Maples case dealt with fire damage to the Maples’ home in Crossville, Tennessee, insured with Tennessee Farmers Mutual Insurance Company.  Coverage was denied on August 26, 2013.  Suit was filed on August 6, 2014, against Tennessee Farmers along with the insurance agent and agency.  Maples asserted the agent was negligent because he was aware Maples had prior felony convictions that never made it onto the insurance application and failed to procure insurance.

Defendants filed motions based upon the suit limitation clause of the policy requiring full compliance with all terms of the policy and that any legal action concerning the policy brought within one year from the date of loss.  Id.  The trial court granted summary judgment and dismissed the case completely.  Id.  Maples contended, however, that the actions against the agent and agency survived even if summary judgment granted to Tennessee Farmers was proper.

The Court of Appeals cited abundant case law that even though there is a six-year statute of limitations in Tennessee for contracts, but that  changes to the applicable statute of limitations by contract are enforceable.  Id.  Because the fire occurred March 25, 2013, and suit filed August 6, 2014, (more than one year and 60 days from March 25, 2013), the suit was time barred.

The Court of Appeals also dealt with the issue and claim that the agent or agency acted improperly in the procurement of the policy.  The court held if Maples had instituted the suit timely, he would have had the opportunity to raise any claims of irregularities in obtaining the policy.  However, when he failed to initiate suit within the contractual limitations period, the issues regarding the policy and its issuance became moot and irrelevant.  Thus, the Court of Appeals found that the trial court properly dismissed actions against the agent and agency.

Tennessee has a statute, T.C.A. § 56-7-130, concerning insurance company requirements with respect to providing sink hole coverage and handling sink hole claims.   The statute was recently amended, and prior to July 1, 2014, was the subject of much litigation.  At issue was whether the statute requiring insurance carriers to “make available” sink hole coverage required them to actually go out and notify existing insureds of the availability of the sinkhole coverage or whether the carriers simply had to have sinkhole coverage available in case an insured wanted to purchase it. 

 The issue was recently decided in the case of Keith Patterson, et al. v. Shelter Mutual Insurance Company, M2014-01675-COA-R9-CV (Tenn. Ct. App. 2015).  This was an action by insured homeowners against an insurance company alleging Shelter Insurance Company failed to “make available” coverage for sink hole activity to the insureds as required by the former statute.  Shelter moved for summary judgment contending that the statute did not require it to notify plaintiffs who were existing insureds that sink hole coverage was an available option.  Plaintiffs filed a cross motion for summary judgment on the same issue which was granted by the trial court.  However, the Court of Appeals reversed the grant of summary judgment to plaintiffs finding that the statutory language, “make available” does not require insurance carriers to provide notice to insureds that sink hole coverage is available.  Id.

The phrase “make available” was not identified in the earlier version of the statute.  The Court of Appeals found t there was no appellate decision in Tennessee interpreting the phrase in the context of the statute.  For this reason, the Court of Appeals turned to dictionary definitions to ascertain the natural and ordinary meaning of “make available.” Id.  None of the definitions it examined contained any requirement that one party notify the another party in order to make something available.  Instead, the Court of Appeals found that “an item or project is made available when it can be obtained.”  Id.  As an example, the Court of Appeals found that a library makes a book available by having the book on its shelves, but does not have to inform its patrons that it has a specific book or that a book is available to its patrons – books are made available simply by being a part of the library’s collection.  Id.  In the same way, an insurance company makes sinkhole coverage when it’s obtainable upon request by an insured. 

The Court of Appeals also referenced other statutes that specifically require an insurance company to “offer” something to an insured.  In the original sinkhole statute, the word “offer” did not appear.  The Court of Appeals concluded that the statute did not require insurers to notify policy holders that they could purchase sink hole coverage.  Use of the words “make available” only required insurance companies to make sink hole coverage obtainable.  The Court of Appeals found Shelter did just that when it filed an endorsement with the Department of Commerce and Insurance.  Id. Thus, we now know that the phrase “make available” simply means to have something available but does not require an offer or notification to insureds. 




In June of this year, Judge Tom Anderson joined the ranks of other judges in Tennessee that have held that punitive damages can be awarded against an insurance company for breach of an insurance contract, if the breach was intentional, malicious, reckless, or malicious.  The case was Carroll v. Nationwide Property & Casualty Company, 2015 U.S. Dist. LEXIS 73674 (W.D. Tenn. June 8, 2015). This case confirms yet again that the 25% penalty afforded by the bad faith statute is not a policyholder’s sole and exclusive remedy for extra-contractual type damages for an insurance company’s bad behavior in handling and making a decision regarding an insurance claim.  The decision was a big win for my clients and Tennesseans as a whole.  For prior posts on this topic, click here and here.

Tennessee is a valued policy state, which means that in most instances an insurance company must pay policy limits in the event of a “total loss.”  Back in 2009, Parks and I offered some differing viewpoints about what a total loss is or should be (see here and here).  One of the issues we discussed way back then was whether a mandatory demolition of a structure after a fire loss should trigger the valued policy law.  After a jury trial and an appeal to the Sixth Circuit Court of Appeals, Tennesseans got an answer to that question.

In Cincinnati Ins. Co. v. Banks, the City of Manchester issued a mandatory demolition order after a fire loss to the policyholders’ residence.  In summary, the City of Manchester required that the home be demolished, but absent the demolition the home may not have been considered a “total loss” because much of the structure was still standing and may not have lost its character and identity as a home.  The insurer argued that it did not owe policy limits for just that reason – that absent the demolition order the property still looked like a house and therefore should not be considered a total loss.  On the other hand, my clients argued and successfully convinced the trial court that a municipal demolition order creates a constructive total loss.  After considering the issue, the Sixth Circuit affirmed the trial court’s ruling that the home should be considered a total loss, but for a different reason:

The constructive loss doctrine and the identity-and-character test are not mutually exclusive, and can lead to the same result.  The demolition order was valid, and therefore the dwelling would not maintain its identity and character after being razed. Thus the property is an actual total loss, not a constructive total loss.

Translation:  If your Tennessee home or business is damaged and then your local municipality or county enforces its codes and requires that the structure be demolished, that triggers the application of Tennessee’s valued policy law, therefore requiring your insurer to pay the full policy limits.  This is a big, big deal – – particularly in cities (such as Memphis) that have codes authorizing demolition in the event the repair costs exceed 50% of the property’s value.

On April 6, 2015, the Tennessee Court of Appeals (Western Section), decided the case of Daniel v. Allstate, No. W2014-01965-COA-R3-CV (download copy here).  In this case, the trial court had granted summary judgment to an insurer based upon the one-year contractual limitations period under the policy.  Factually, the subject property was damaged by fire on December 15, 2011.  A claim was submitted, but the case does not indicate that formal Proof of Loss was involved.  The insurer submitted an estimate and tendered a settlement check to the insured, advising actual cash value was being paid at that time, and that the insured would be entitled to a claim for recoverable depreciation in accordance with the policy.  Over a year later, the insured filed suit alleging they were owed additional monies under the policy.  The trial court granted summary judgment to Allstate, and the Court of Appeal affirmed.

The Court of Appeals noted:

             The trial court determined that Allstate’s acceptance of the Daniels’ claim had the same effect as a denial in triggering the contractual limitations period prior to the expiration of the settlement.  The trial court concluded that because the Daniels failed to file suit within one year of the date that the settlement check was tendered and accepted their claim was barred by the one-year contractual limitations period.  We agree with the trial court’s reasoning. 

(See Page 5).  In explaining the rationale, the court noted:

             Accordingly, regardless of whether the insurer choses to grant or deny the claim prior to the end of the settlement period, its determination to do one or the other acts as a waiver of its immunity from suit, and the contractual limitation period begins to run…if the Daniels were not satisfied with the amount of Allstate’s estimate and/or settlement check, they had one year from that date to challenge it in court. 

(See Page 6).

The real point of this case was that it was the insureds who knew, or could have known, that they were dissatisfied with the payment made by the insurance company, and they had the power to timely file suit.  Please note the court seemingly broadened older cases holding an absolute denial or refusal to pay a claim submitted by the insured was required, as the case does not indicate that either occurred.  This holding is even more favorable to the insurance companies than are those cases which base the contractual period of limitations upon the failure to pay a Proof of Loss within the loss payment period.  The case does not detail whether a Proof of Loss was ever submitted, and we have detailed other cases on this blog which use the date of the Proof of Loss as the determinative date to begin the loss payment and contractual limitations period.

Practically, this case makes sense.  If the insureds are dissatisfied with the payment, they should file suit within that contractual limitations period.  If they do not, they seem to be barred under this holding.