It’s hard to turn on the TV these days and not see commercials for insurance. It’s a competitive industry, and to their credit, some of the carriers do a good job of producing funny ads. Whether the ads involve geckos, emus, or dysfunctional families, they get the point across that their rates are competitive and their customer service is good.
But that good customer service is a two-way street. Reputable insurance carriers will often work with vessel owners to resolve claims efficiently, but they might request cooperation in doing so. The vessel owner must help the carrier verify the facts of a claim, in terms of the basic who, what, when, where, and other details.
This is one of the cornerstones of the insurance industry. If a carrier is going to issue a check, it wants to verify things by asking questions. And if the carrier doesn’t get the answers it needs, the claim is likely to be denied. Over the years, I see this as a common reason for insurance denials. And it’s exactly what happened in a claim involving the theft of a vessel.
Following the disappearance of a boat, engine, trailer, and other property, the owner filed a claim. The insurance carrier involved was one of the major ones we see on TV. In investigating the claim, the carrier wanted the boat owner to attend an examination under oath or EUO. These EUOs can last an hour, or they can last three or four hours. The routine is straightforward. The carrier’s attorney asks questions. These could start out as “softballs,” along the lines of, “Please tell us your name, address, boat description, what is the length of your vessel, how long have you been a boater, etc… ”
Depending on the level of suspicion on the part of the carrier, the questions could escalate into “hard balls,” along the lines of, “Where you on the night of May 1st, can anyone vouch for that, how many drinks did you have at the Fourth of July party before you left the dock, why did you let a twelve-year old take the helm when you went below, etc… ”
In this case, the boat owner responded to the carrier’s EUO request by retaining an attorney. The attorney filed a lawsuit against the carrier. The basis of the lawsuit was a breach of contract. The insurance carrier’s demand for a EUO was deemed to be an accusation of fraud. But there was a problem with this argument. The insurance policy said that the boat owner had a duty to submit to such EUOs. Additionally, a lawsuit could not be filed unless the boat owner complied with the policy. This made it difficult to keep the boat owner’s lawsuit afloat.
The lower court ruled in favor of the insurance carrier. And the boat owner appealed. We’ll get back to the outcome of the appeal in a minute. It’s worth noting that this duty to cooperate could include other obligations as well. In the case at hand, the issue was theft. But in cases involving injury, the obligation could be to appear for a physical examination with the insurance carrier physician to verify injuries claimed. In the industry, these are called independent medical examinations, or IMEs. They are common in other areas as well, such as no-fault and workers’ comp cases.
Other forms of duties to cooperate could include producing documents, for instance in verifying the ownership or appraisal for the value of an item. Another duty could include allowing access to a vessel. If the owner provides a statement that the other vessel struck him on the starboard side, the carrier might want to see the actual damages along the rub rail and any evidence that might indicate the respective angles of the vessels to one another.
If these types of requests seem intimidating to a boat owner, they are always free to consult with an attorney. Insurance carriers have no qualms about the vessel owner being represented by counsel. They just want their opportunity to ask questions. Certain inquiries could be challenged. Objections could sometimes be raised. But simply choosing to refuse to cooperate will invariably result in denial of a claim. As for the claim at hand, the higher court sided with the insurance carrier on appeal.
Best wishes for a safe and happy Labor Day weekend! Tim, Erol