The title of this submit is what I believed whereas studying a movement for abstract judgment filed final week in a pending Arizona case by which our agency has no involvement.¹ Except the policyholder might have felony implications come up on account of offering testimony, I might counsel there isn’t a upside to refusing to go to a pre-suit demand for an examination underneath oath.        

Maybe the easiest way to have a look at that is first to see what the regulation says occurs when a policyholder refuses to go to an examination underneath oath. The insurer famous Arizona regulation as follows:

In Warrilow v. Superior Courtroom of State of Ariz. In and For Pima County, 142 Ariz. 250 (1984), the seminal case on this difficulty, the insured filed a declare for lack of firearms which was adjusted and paid. Shortly thereafter, the insured modified its firearms coverages and once more claimed a theft loss to firearms. The insurer acknowledged receipt of the insured’s proof of loss however rejected it as inadequate for a number of causes together with as a result of there was no documentation verifying the possession or values of the gadgets, and requested an EUO pursuant to the circumstances within the insurance coverage coverage issued to the insured. he EUO was taken, however the insured refused to reply quite a lot of questions. Counsel for the insurer suggested the insured and his counsel that refusal to reply may be deemed a failure to cooperate which could trigger the insurer to void its protection. Id. Nothing additional transpired on the declare till the insured filed go well with. The insurer filed a movement for abstract judgment on the grounds that the insured’s failure to reply questions at his EUO was a breach of his obligation to cooperate with the insurer which constituted a whole protection to his declare for protection. The movement was denied, and the insurer appealed.

The appellate court docket held that an EUO situation is a typical provision in an insurance coverage coverage and that the regulation was ‘nicely settled; {that a} failure or refusal to conform will represent a bar to any restoration towards the insurer.  The ‘solely limitation’ the court docket famous, was that the ‘questions be materials to the circumstances surrounding the insurer’s legal responsibility and the extent thereof.’ The court docket discovered that the knowledge sought concerning the alleged theft of firearms, particularly the variety of weapons the insured owned, whether or not or not he bought any weapons he had bought, and the supply of his revenue, was clearly materials to protection underneath the coverage in gentle of the specific exclusion for protection of property pertaining to the enterprise of a gun seller and the coverage’s requirement that the insured present passable proof of curiosity within the property and its loss. The court docket referenced different case authority holding {that a} full failure to seem for an EUO additionally bars restoration on a declare.

I’ll predict that the policyholder on this case will argue that the insurance coverage firm was not prejudiced as a result of the insurer finally took a deposition which is identical as an examination. The policyholder can also argue waiver.

However why did the policyholder should make any argument on this difficulty? Why not go to the examination underneath oath and keep away from the insurance coverage firm’s protection? Why put your self within the place of shedding on a technicality?   

I’m scripting this as a result of I routinely discipline questions asking if policyholders can refuse to go to an examination underneath oath or asking for causes which might defeat the insurer’s demand. Whereas policyholders might win the authorized argument for avoidance, policyholders shouldn’t place themselves in that place if they will keep away from it.  Except there are felony implications by giving the testimony, it’s an “every thing to lose and nothing to be gained” from refusing to attend an examination underneath oath.  

Thought For The Day   

Some folks don’t like change, however you have to embrace change if the choice is catastrophe.

—Elon Musk

¹ El Pacifico Mesa v. Hartford Underwriters Ins. Co., 2:22-cv-01241 (D. Ariz. June 2, 2023).