Misrepresentation and Dwelling Fire

Micle v. MIC Gen. Ins. Corp., 2019 WL 1532685, 2019 NY Slip Op 30840(U) (Queens Co. Sup. Ct. Feb 6, 2019)

This case involved a first-party property insurance dispute in which the insurer denied a claim for fire damage to a three-family dwelling. The policy’s declarations identified the dwelling by its address and the fact that it was “two-family,” not three-family. The insurer denied coverage on this ground, and also because the insured materially misrepresented in its insurance application that the dwelling was two-family when in fact it was three-family.

The insurer moved for summary judgment on these facts, as well as that the dwelling had been three-family years before the insured submitted its application. In opposition, the insured claimed that no misrepresentation was made to MIC General Insurance Company because the insured never submitted an application to that company but, rather, to a predecessor company, CastlePoint Insurance Company. The insured also argued that the dwelling’s configuration was not material because MIC had inspected it before issuing the policy and, further, that the brokers were supposedly MIC’s agents who were aware of the dwelling’s configuration prior to the fire.

The court granted MIC’s motion on the grounds that the policy’s description of the dwelling did not match the property as it actually existed and that the insured ratified the misrepresentation in the application by accepting the policy for a two-family dwelling and permitting the policy to be renewed for years on the same terms. The court additionally concluded as a matter of law that brokers represent policyholders (not carriers) and, thus, the brokers’ knowledge could not be imputed to MIC. Finally, the court rejected the insured’s argument that MIC’s inspection put the company on notice of the dwelling’s true configuration, because only the exterior was inspected, not the interior.

This decision is one of only a few first-party property insurance cases involving an insured who ratified a misrepresentation by accepting a policy covering property that was inaccurately described.

This also appears to be the only decision holding that a property falls outside of the grant of coverage where the policy is a “dwelling fire” policy, which does not contain the detailed definition of the “residence premises” that is set out in standard homeowners’ policies. All other decisions concerning this issue appear to deal with standard homeowners’ policy, not a dwelling fire policy.

MIC General Insurance Corporation was represented by partner Kevin F. Buckley.


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