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Intentional loss – preponderence and not fraud



AA Acupuncture Serv., P.C. v Safeco Ins. Co. of Am.,

2009 NY Slip Op 29311 (App. Term 1st Dept. 2009)

This was a really interesting decision. It is so rare that the Appellate Term, First Department writes a lengthy decision about any topic, let alone one involving a no-fault case. The law announced in this case represents established law. An insurance carrier may disclaim all no-fault benefits or other first-party benefits as to a party who makes material misrepresentations in the procurement of an insurance policy.

There was an interesting line in there, which I am not sure represents settled law:

This evidence was [*2]sufficient to establish prima facie that the insured intentionally misrepresented her address in order to obtain insurance at reduced premiums, and that the misrepresentation was material, since defendant would not have issued the policy under the same terms had it known that the insured resided in Brooklyn

Yet, the Appellate Division last year stated the following in Precision Auto Accessories, Inc. v. Utica First Ins. Co., 52 AD3d 1198 (4th Dept. 2008):

Defendant’s president further stated in his affidavit that, “if [defendant] had been aware of plaintiff’s true *1201 loss history … [defendant] would not have issued a policy of insurance to plaintiff.” Contrary to plaintiff’s contention, defendant is correct that it need not establish that the misrepresentations were willful in order to rescind the contract. Insurance Law § 3105(b) does not specify that a misrepresentation must be willful, and “[w]hether or not plaintiff intended to provide inaccurate statements or misrepresentations at the time [it] filled out the application is irrelevant”

Besides the above, Justice McKeon’s concurring opinion was interesting. He made an interesting observation, one I always joke about. Specifically, have you ever wondered whether the registrants of out of state vehicles, registered in non no-fault states, really reside in those states?