The Need for the Advice of the Coverage Lawyer Who Takes the EUO
A well-executed EUO is not only one of the insurer’s most effective weapons against fraud. It can also be highly instructive for the adjuster. If an attorney is responsible for performing the examination, the adjuster must make clear that it is his or her obligation to provide sufficient factual information supported by legal authority for the insurer to make a decision on the claim.
The adjuster should also, if possible, attend the EUO to help the attorney and to study questioning techniques. Attorneys, whose job it is to ask questions, will usually do a more thorough job of EUO than will insurance claims staff.
After the EUO, the attorney will usually suggest additional investigation and can also give the adjuster legal advice as to the insurer’s rights, duties, and obligations.
Counsel’s report should include all the facts necessary to support any decision, whether learned in the course of the investigation or from testimony at the EUO. The adjuster must analyze the facts in relation to statutory and case law; only then will he or she be in a position to make a fully informed decision on the claim. More often than not, the examination will cause the insurer’s attorney to recommend payment of full indemnity to the insured.
If the attorney advises the insurer that indemnity should not be paid, the adjuster should carefully analyze the recommendations to independently verify that there are sufficient facts, supported by policy language and legal precedent, to support the conclusion. It is the claims person who makes the decision, not the attorney. Decisions made by insurers must sometimes be based on reasons other than the law.
Insurers should use the EUO tool judiciously. It should only be used in cases where the insured is unable to prove his or her loss, when the insured’s proof is inconsistent or incomplete, or when the insurer has a reasonable belief that a fraud is being attempted.
© 2020 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and firstname.lastname@example.org.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts
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