What is it?
The EUO is an opportunity for the insurer to ask questions of an insured and to obtain answers to those questions under oath. Make no mistake - an EUO is part of the investigation process, not part of the adjustment process. Sometimes it is used to clarify an ambiguous, confusing or puzzling set of facts that the insurer cannot decipher. More often, however, it is used to lock an insured into a position and to obtain a deposition-style statement that can be used in a subsequent proceeding. Most often, it is conducted by an attorney, in a law office, with a shorthand reporter recording every word from which a transcript will be prepared. The transcript can provide both substantive evidence and cross-examination material at trial or in another later proceeding.
What does it mean?
Demand for EUO means that the insurer is concerned that the claim may not be as the insured contends. Usually a Special Investigations Unit (SIU) has undertaken an investigation which suggests that the insurer may have a good basis to deny the claim. The reasons for the demand can run the gamut from a simple "feel of the case" all the way to incriminating testimony offered by a third party. Something exists which impels the insurer to incur the expense of counsel and a shorthand reporter in order to resolve some open questions as to the legitimacy of the claim as to coverage, cause or damages.
You play a key role in the process of satisfying the insurer's inquiry. One of your most important contributions can be to prepare your insured for the EUO. While the insured must comply with the request to attend and give testimony, the time and place of the EUO and the quantity of documents can be adjusted. You can facilitate the necessary changes and a more focused document presentation after making inquiry about the insurer's real concerns.
Often the insured will ask you whether they need or should have an attorney. While I would like to tell you to recommend hiring counsel in every instance, I will refrain. Having conducted many hundreds of EUOs and supervised countless more, I must admit that the answer to this question depends largely on the insured and where the investigation has gone to this point. Some people are capable of providing the information that clears up any confusion and resolves the claim. Other insureds just get themselves into more trouble by trying to go it alone. Having dealt with the insured for some time, you can offer candid advice.
Whichever course the insured chooses, preparation is the key! If the insured elects to retain counsel, you may become the liaison/translator for your client. If the insured elects to proceed without counsel, you can play the critical role of preparing the insured for the EUO as to both the anticipated questioning and the presentation of documents that are responsive to the insurer's real inquiry. (Be sure you protect yourself by actually telling the insured to tell the truth!) Remember that an EUO gives the insured an opportunity to dispel unwarranted suspicions as well as a further chance to forfeit the policy by testifying falsely under oath, by concealing or misrepresenting a material fact, by admitting facts that defeat coverage or in some other way providing a reason for the insurer to avoid paying the claim.
If we can help your insured with representation at an EUO or in preparing for one, or if you have questions concerning an insurer's demand for an EUO, please feel free to contact us at 973-538-4100 or email@example.com.