Washington Supreme Court Issues an Unprecedented Decision Regarding a First-Party Insured’s Compliance with a Policy’s EUO Provision

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The examination under oath has long served as a valuable tool to prevent fraud and exaggeration in property insurance claims, while also keeping the cost of insurance as low as possible. The Washington Supreme Court, however, did insurance consumers no favor when it recently held, in an 8-1 decision, that an insured may substantially comply with an insurer’s request for examination under oath (EUO), even where the insured never submitted to the requested EUO. Staples v. Allstate Ins. Co., No. 86413-6, Washington Supreme Court (Jan. 24, 2013). The court also held that an insurer must establish actual prejudice before denying a claim based on the insured’s noncompliance with the EUO request. The court’s decision is a departure from previous precedent.

In Staples, the insured’s van and a large assortment of tools were stolen on August 18, 2008. In the police report, the insured identified the tools’ value at approximately $15,000 and stated the tools were for work purposes. The insured subsequently submitted a claim under his homeowners policy with Allstate and claimed the tools were for “personal use,” valued between $20,000 and $25,000, but could also be used for work. Due to the inconsistencies, Allstate requested documents and additional information to substantiate the loss and provide additional details as to the insured’s financial status. Allstate interviewed the insured twice, and while recorded, the interviews were not under oath. Despite additional requests, the insured did not provide any documentation until December 2008.

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