Policyholder Pulse
Resolving an issue of first impression, the California First District Court of Appeal recently decided that property policyholders required to submit to an examination under oath (EUO) have a right to record the entire examination proceeding, including by capturing the insurers’ representatives and adjusters on video.
Property insurance policies commonly include a provision that allows insurers to require policyholders to submit to an EUO. Although touted by insurers as a means to fully investigate undocumented or otherwise suspect claims, the California legislature recognized that EUOs are often used to intimidate and harass innocent policyholders. To address that concern, the California legislature adopted Insurance Code section 2071.1, which provides a list of rights policyholders may enforce if required to submit to an EUO. The rights mentioned on the list are not intended to be exhaustive. Among those rights is the right to “record the examination proceedings in their entirety.”
It was a policyholder’s attempt to enforce that right that led to the California First District Court of Appeal’s recent decision in Myasnyankin v. Nationwide Mut. Ins. Co.
After submitting a water damage claim to his insurer, Nationwide, policyholder Vladimir Myasnyankin was required to submit to an EUO, which was scheduled to proceed in person. Pursuant to his rights under Section 2071.1, Myasnyankin attempted to videorecord the entire proceeding, including the conduct of Nationwide’s attorneys and adjusters. Nationwide would not agree to have its lawyers or adjusters on camera and gave Myasnyankin an ultimatum: either Myasnyankin agreed to proceed with the EUO with the camera aimed at him alone, or Nationwide would terminate the EUO and deny Myasnyankin’s claim for failure to proceed with the EUO. Myasnyankin chose neither, instead filing an action for declaratory relief against Nationwide.
Finding that the express terms of Section 2071.1 and the legislative history behind its adoption made clear that the California legislature intended to provide policyholders with expansive rights to protect themselves against unfair and abusive claims investigation practices, in the published portion of its decision, the Court held Section 2071.1 grants “insureds the right to make a video recording of the insurer’s representatives at an EUO[.]”
Why would Nationwide resist having its counsel or adjusters on camera? A cynic might conclude that the insurer wanted to bully the policyholder without a record. Perhaps Nationwide recognized that aggressive questioning on camera might be strong evidence against it in a bad faith case. Nationwide did not identify these concerns, instead arguing that having to be on camera would increase the costs of an EUO. But the Court swatted that argument down, noting that there would be no need for professional videographers—the policyholder could simply prop up his or her cell phone camera to record the insurers’ conduct.
Further vindicating Myasnyankin’s claim and in recognition of the importance of protecting policyholders, in the unpublished portion of its decision, the Court held Myasnyankin had a right to attorney’s fees under California Code of Civil Procedure section 1021.5, which codifies California’s longstanding private attorney general doctrine.
The Court’s decision to publish the portion of its decision clarifying insureds’ rights under Section 2071.1 is a recognition of the importance of robust consumer protections in the insurance arena, where insurance companies often subject insureds to myriad unfair practices and abuses. Insureds must remain wary and well-informed of their rights.