This opinion interprets the "examination under oath" clause included in fire insurance policies pursuant to N.J.S.A. 17:36-5.20.
Plaintiff Carl Ransom's dwelling, covered by an insurance policy issued by Selective Insurance Company, was destroyed by fire. Local police have filed a charge of arson against Ransom. That claim has not as yet been raised by Selective. However, through counsel, it has demanded that Ransom submit to an examination under oath as required by policy provisions. Those provisions, which comply with the requirements of N.J.S.A. 17:36-5.20, as pertinent here, are:
In case of a loss to which this insurance may apply, you shall see that the following duties are performed:
d. exhibit the damaged property as often as we reasonably require and submit to examination under oath. . . .
Counsel's letter requesting the examination demands, among other things, production of income tax returns, payroll records, itemized listings of income received, assets and liabilities and
various other kinds of financial information. Ransom objects to the furnishing of the data demanded, claiming that the insurer is limited to a request for information which relates directly to the fire loss and not to indirect information contained in material which may otherwise be privileged. The insurer argues that it has a right to the requested financial information in order to determine whether it should decline coverage by reason of arson. It points out that Ransom's financial circumstances may indicate a need for money sufficiently severe to motivate the burning of the dwelling.
Our New Jersey courts have not considered the scope of the "examination under oath" clause. No doubt insurance policies, as contracts of adhesion, must be construed most strongly against the carrier and in a way that meets the expectations of the insured, namely, to provide coverage. Summonte v. First American Title Ins. Co., 180 N.J. Super. 605, 610 (Ch.Div.1981), aff'd 184 N.J. Super. 96 (App.Div.1981). These basic rules of interpretation are of little assistance here and they may not even apply when the language is statutory. Kisting v. Westchester Fire Ins. Co., 290 F. Supp. 141, 147 (W.D.Wisc.1968). When policy language is clear, the courts must enforce it. Boswell v. Travelers Indemnity Co., 38 N.J. Super. 599 (App.Div.1956).
The words "examination under oath" are clear. They are part of a clause which is statutorily required and included in that section of the policy dealing with duties imposed upon the insured after a loss occurs. The information sought by the insurer in order to consider a possible claim of arson, particularly when the insured has been charged with arson by the police authorities, is relevant, material and reasonably sought. Logically, the information should be provided, and must be, unless the invasion of privacy is so great or the language of the policy so limiting that a financial inquiry is impermissible. This court finds no such invasion and no such limiting language.
A number of courts in foreign jurisdictions have considered the clause in question. North Carolina has a statute similar to New Jersey's, N.C.Gen.Stat. § 58-176, which, however, specifically requires the insured to produce certain financial records on request. In Chavis v. State Farm Fire and Casualty Co., 317 N.C. 683, 346 S.E. 2d 496 (Sup.Ct.1986), the court held that a claimant's financial condition is a relevant matter of inquiry when arson is suspected. Nevertheless, the court required a request for the production of documents to be reasonable and specific, prohibiting any unlimited excursion into an insured's business records. 346 S.E. 2d at 498-499.
New York has statutory provisions similar to North Carolina's. N.Y.Ins.Law § 3404. In Happy Hank Auction Co. v. American Eagle Fire Ins. Co., 286 A.D. 505, 145 N.Y.S. 2d 206 (1955), mod. on other grds 1 N.Y. 2d 534, 154 N.Y.S. 2d 870, 136 N.E. 2d 842 (Ct.App.1956), the court read them as requiring the production of documents relating to the financial condition of the insured, provided suspicious circumstances were present and the request for documents had point and direction. 145 N.Y.S. 2d at 211. In Ausch v. St. Paul Fire & Marine Ins. Co., 125 A.D. 2d 43, 511 N.Y.S. 2d 919 ...