A Massachusetts appeal court refused to uphold an insurer’s fire claim rejection that was based on an alleged failure of the insured to submit to a “reasonably required” examination under oath in the course of investigating the claim because, on the facts, the insured had not wilfully and without excuse refused to present its president and owner for an examination under oath.

The provision in the policy provided that the insurer “may examine any insured under oath, while not in the presence of any other insured and at such times as may be reasonably required about any matter relating to this insurance or the claim …”. Under Massachusetts law, attendance at a reasonably requested examination under oath is a condition precedent for insurance coverage and an insurer may properly disclaim coverage when faced with a wilful, unexcused refusal to submit to an examination under oath, the insurer having to prove actual prejudice.

The insured had initially sent another witness to be examined under oath but she was unable to answer all the questions and suggested that the company’s president may be able to answer two questions. Correspondence followed between insurer and insured. In the course of the correspondence the insurer gave deadlines but then denied coverage in the interim without allowing the insured the opportunity to respond within the stated deadline. The insured took the position that, even though it thought it had already satisfied the requirements under the policy, it would nevertheless consider the additional examination under oath once more information was provided why the examination was reasonably required. The insurer declined to give reasons and rejected the claim whilst correspondence was still in play. The court held that in the circumstances there was no unexcused and wilful refusal by the insured to present its president for an examination under oath. The Massachusetts courts have held in favour of insurers where there is a flat refusal to attend a requested examination under oath, where there is a refusal to answer questions at the examination, where the witness walks out of the examination, or the witness deliberately delays the examination. The insured’s conduct bore no resemblance to such behaviour.

On these facts, a similar decision would be reached by a South African court. Many South African policies require, in a rather archaic phrase, the insured to “give the company such proofs, information and sworn declarations as the company may require”. That would be interpreted to mean “may reasonably require”. There is however seldom a provision in the policy which specifically entitles the insured to reject a claim if there is no such cooperation. The South African courts also discourage taking witness statements on oath and, depending on the circumstances, may not find a sworn declaration to be a reasonable requirement.

[Philadelphia Indemnity Insurance Company v BAS Holding Corporation, United States Court of  Appeals for the First Circuit, case number 22-1296 (17 August 2023)]