THE REPRESENTATION THAT THE INSURED PROPERTY WAS A TWO-FAMILY DWELLING WHEN, IN FACT, IT WAS A THREE-FAMILY DWELLING, WAS A MATERIAL MISREPRESENTATION; COVERAGE FOR FIRE DAMAGE PROPERLY DISCLAIMED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the representation that the insured property was a two-family dwelling when, in fact, it was a three-family dwelling, was a material misrepresentation and was a proper basis for denying coverage for fire damage:

“‘[T]o establish its right to rescind an insurance policy, an insurer must demonstrate that the insured made a material misrepresentation. A misrepresentation is material if the insurer would not have issued the policy had it known the facts misrepresented'” … . “‘To establish materiality as a matter of law, the insurer must present documentation concerning its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, that show that it would not have issued the same policy if the correct information had been disclosed in the application'” … . “‘[E]ven innocent misrepresentations, if material, are sufficient to allow an insurer to defeat recovery under the insurance contract'” … .

Here, MIC [the insurer] demonstrated, prima facie, that the application for insurance contained a misrepresentation regarding whether the premises was a two-family dwelling and that this misrepresentation was material … . … MIC established that the material misrepresentation was attributable to her, since, even if the application for insurance had been submitted without her actual or apparent authority, she ratified the representations contained in the application by accepting the policy for a two-family dwelling … . Estiverne v MIC Gen. Ins. Corp., 2024 NY Slip Op 06327, Second Dept 12-18-24

Practice Point: Even an innocent misrepresentation supports the denial of insurance coverage if it was material.​

Practice Point: Here plaintiff alleged she was unaware of the misrepresentation. The court held she ratified the misrepresentation when she accepted the insurance policy.