You probably have had carriers ask your client in an auto case to submit to a recorded statement or an examination under oath. How you react should depend on the coverage issues at play. If you are seeking uninsured-underinsured motorist coverage from the requesting insurer, then you have some freedom in how to handle the request. Why? Because your UM insurer is considered your adversary under Virginia law, and you have no duty to cooperate with them, unlike in some other states.
Here are your strategic goals in connection with such insurer requests:
- Keep your client comfortable despite any aggressive tactics by their UM insurer;
- Avoid potentially inconsistent statements that might be used to impeach your client or a witness in a later coverage action, where they probably can insist on deposing your client. The more your client or a witness speak on a topic reduced to a durable form, the greater chance they will create inconsistency or other impeachment issues; and
- Avoid making statements that hurt your liability or damages arguments in the underlying tort dispute.
The easiest way to achieve those strategic goals is refuse to provide such a statement. And since insureds have no duty to cooperate with their insurer over a UM claim, the default choice should be to reject the request. Remember, your UM insurer is your adversary under Virginia law, and you can treat it like one. (Some states require cooperation, and adjusters who deal with claims from those states often need education on Virginia law regarding UM cooperation in the Commonwealth.) And yet there are times when you might want to comply with such a request.
When you might want to allow an EUO in a UM setting
Perhaps the client needs to settle the case because of financial or other conditions, and they cannot wait for a coverage action to proceed, let alone conclude. Or perhaps you and the client have decided the cost of going forward does not justify taking the case to trial, but the insurer won’t pay to settle without more evidence to support coverage. For example, if your client is not a named insured, a UM carrier might believe it could have coverage defenses arising from the residency of your client in a family household, use or lack of use of an insured vehicle, or occupancy of such a vehicle.
If you do let such an exam happen in order to satisfy the supposed needs of an insurer, place restrictions on the subject matter you will allow your client to address. Since helping the carrier is not required, you can do exactly that. Condition the exam on avoiding topics that are better left to the tort action, such as the client’s medical status, pain and suffering, liability factors, contributory negligence.
When choosing between the two, you probably want to almost always insist on an EUO rather than a recorded statement. Recordings can be garbled or subject to different interpretations. An EUO with a transcript that can be corrected should avoid those problems. Also, EUOs require a lawyer to ask the questions and a court reporter to transcribe them, so they cost more to create than recorded statements. Thus, if you insist only on an EUO, the insurer may decide it is not worth it and withdraw the request.
Below is a letter you can cut, paste, format, and send to any UM carrier that tries to condition your client’s UM coverage on your cooperating by providing an EUO or other similar statement. We cannot remember seeing a carrier continue to pursue an EUO or statement after receiving a letter like this.
Here it is:
Insurance Company Adjuster
Re: Insured: [Insured]
Dear: [Adjuster/ Counsel]:
Thank you for your request for [a recorded statement/examination under oath] from [Insured]. As we explain below, an uninsured-underinsured motorist (“UM”) insurer cannot require that from its insured under Virginia law.
Specifically, Virginia Code § 38.2-2206 (the “UM statute”) provides: “…nor may anything be required of the insured except the establishment of legal liability [of an uninsured or underinsured motorist.]” Va. Code § 38.2-2206(h) Nothing else in the statute suggests a carrier may require [a recorded statement/an examination under oath].
The Virginia Supreme Court has confirmed that the UM statute does not allow UM carriers to condition coverage on providing such or similar statements. Nationwide Mut. Ins. Co. v. Sours, 205 Va. 602 (1964).
In that case, the policy in question required that the insured shall have filed with the carrier, within 30 days after an accident, a statement under oath that the Insured or their legal representative has a cause or causes of action arising out of such accident for damages against a person or persons whose identity is unascertainable, and setting forth the facts in support thereof.
The court held that assuming that proviso did not apply to the plaintiff in that case, as “it would clearly be invalid for the reason that it imposes on the insured a condition beyond those incorporated in [the then applicable UM statute], which fixes the terms and obligations of a policy of this character.” Id. at 607. “There is no such requirement in the statute for the filing of such a statement with the Insurance Company.” Id. at 608. Indeed, such a requirement “is in conflict with” the statute’s provision “nor may anything be required of the insured except the establishment of legal liability.” Id.
Any cooperation requirement connected to liability insurance has no bearing on UM coverage, because a fundamental difference exists in the insurer-insured relationship as to each coverage type. “When tort litigation ensues, the liability insurer is the insured’s defender; the [UM] insurer is the insured’s adversary.” Seals v. Erie Ins. Exch., 277 Va. 558, 563 (2009). The insured prevailed in that case, securing a unanimous reversal on appeal of the trial court’s judgment.
In reaching that result, the Supreme Court of Virginia confirmed once again the adversarial relationship between insured and UM insurer. That relationship does not support requiring an insured to help its adversary.
We therefore trust that [Insurer] will follow the law and drop its insistence on [a recorded statement/an examination under oath] by the insured. Nothing in the UM statute or caselaw requires responding to such a demand by a UM carrier.
Please let us know of any further questions on this point.