Insurance companies make money by paying out less in claims than they receive in premiums. As long as premium rates are fairly regulated, healthy competition exists within the industry to keep rates in check, and carriers operate in good faith with regard to the claim process, there is nothing wrong with carriers making respectable profits.
Insurance premiums are regulated by the state government. Arguably, the carriers’ rate requests are given too much deference by the governing authorities. Considering the carriers’ financial resources and the pro-business/anti-consumer climate in Tallahassee, with a Governor Scott and the House and Senate in Republican hands, this is not a surprise.
Competition among carriers is brisk, although it is curious how similar their rates are and how the premiums are always at or near the maximum levels allowed by law.
All carriers try to pay as little as possible on all claims. The carriers that seek this outcome through fair and honest dealings should not be faulted. There is nothing wrong with thorough and expeditious fact gathering and inquiry.
Unfortunately, not all carriers handle claims in good faith.
An insurance policy is a contract been the insured and the insurer/carrier. Certain obligations are imposed on each party to the insurance contract. The insured must pay the premium and cooperate in the claims process, while the carrier must process claims in good faith and pay the proper amount on legitimate claims.
One of the tools at the disposal of carriers to gather information about claims is the Examination Under Oath, or EUO. An EUO is an oral examination conducted under oath by an insurance company of an insured making a claim under a policy. A carrier’s right to conduct the EUO is a matter of agreement between the insurer and the insured. Its terms will be set forth in the insurance policy.
EUOs are not performed in every claim. However, when they are requested, insureds are obligated to give them. A failure to reasonably cooperate will lead to the denial of a claim. In other words, cooperation is a condition precedent to a carrier’s obligation to pay.
Until recently, the courts provided little guidance as to the boundaries, if any, of inquiry allowed during EUOs.
I have participated in hundreds of EUOs for our firm’s clients. Most of them have been conducted responsibly and professionally by insurance company representatives, with due respect extended to the insured and the questioning fairly focused on the pertinent issues concerning the claims. A few have not.
Sadly, without the presence of lawyers at EUOs protecting insureds, some carriers will try to harass their insureds into dropping claims or accepting less than full value.
That is what happened in the case of De Leon v. Great Am. Assur. Co., So.3d. , 36 FLW D2250a (Fla. 3d DCA Oct. 12, 2011).
Mr. De Leon filed a claim with his insurance company for the loss of personal property when his truck was stolen. Mr. De Leon appeared at his EUO without an attorney. The EUO was conducted on behalf of the insurance company by Luis A. Diz, a lawyer employed by the law firm Hinshaw Culbertson. (Some carriers contract with outside law firms to conduct EUOs.) Mr. Diz never addressed the issue of the theft. Instead, he abused his power at the EUO by repeatedly and continuously probing into unrelated personal details, including a prior completely unrelated criminal conviction.
Sensing that Diz was crossing the line, Mr. De Leon refused to answer most of his questions. He eventually walked out of the EUO, hired a lawyer, and filed a lawsuit against the carrier. The carrier eventually paid the claim and attorney’s fees (pursuant to Florida Statute 627.428) to Mr. De Leon’s lawyer.
The lesson of De Leon is that the right to an EUO does not give the insurance carrier a “license to make unwarranted and intrusive inquiries into the personal life of any insured who has the temerity to make a claim against it.” Insureds have the right to refuse to answer “wholly impertinent and improper” EUO questions that have nothing to do with the merits of the claim.
Note: the District Court excoriates Mr. Diz in its written opinion.
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Jeffrey P. Gale, P.A. is a South Florida based law firm committed to the judicial system and to representing and obtaining justice for individuals – the poor, the injured, the forgotten, the voiceless, the defenseless and the damned, and to protecting the rights of such people from corporate and government oppression. We do not represent government, corporations or large business interests.