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THE MATERIAL MISREPRESENTATION THAT THERE WAS NO SWIMMING POOL ON THE PROPERTY JUSTIFIED THE DISCLAIMER OF COVERAGE FOR FIRE DAMAGE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant insurer (Union Mutual) was entitled to rescission of the insurance policy based upon a material misrepresentation made by the plaintiff (the insured). The plaintiff-insured represented that there was no swimming pool on the property. After the property was damaged by fire, the insurer learned there was a swimming pool on the property and disclaimed coverage:

… Union Mutual established its prima facie entitlement to judgment as a matter of law by demonstrating that the plaintiff made misrepresentations on his application for insurance, and that it would not have issued the 2017 policy and the 2018 policy had the plaintiff disclosed that there was a swimming pool on the property … .. Union Mutual submitted with its motion for summary judgment an affidavit from its underwriter, along with Union Mutual’s Underwriting Guidelines for its New York Landlord/Tenant Property and General Liability Package Program, which provide that swimming pools are an unacceptable risk, and if a potential insured answered “yes” to the question on the application asking if there is a swimming pool on the property, no policy of insurance would issue. With these undisputed facts, Union Mutual demonstrated as a matter of law that the misrepresentations in the plaintiff’s applications for insurance were material. In opposition, the plaintiff failed to raise a triable issue of fact.

A material misrepresentation, even if innocent or unintentional, is sufficient to warrant rescission of an insurance policy … . Nabatov v Union Mut. Fire Ins. Co., 2022 NY Slip Op 02005, Second Dept 3-23-22

Practice Point: Here the insured represented to the insurer that there was no swimming pool on the property. After a fire the insurer learned there was a swimming pool on the property. The insurer demonstrated it would not have issued the policy if it had been aware of the swimming pool. The misrepresentation was therefore “material” and justified the denial of coverage for the fire.

 

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