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March 3, 2015

Appellate Division Dismisses Fire Loss Claim Where Application Contained Material Misrepresentation Ratified By Insured

In Morales v. Castlepoint Ins. Co., 2015 NY Slip Op 01618 (2d Dep't, February 25, 2015), the plaintiff, Michael Morales, sought insurance coverage under a dwelling policy for a fire loss. The application for the policy, which had been renewed for multiple years, stated that the insured premises would be owner-occupied and would serve as Morales's "primary residence." In addition, the policy stated that the premises were "owner-occupied," despite the fact that Morales never lived there.

Following receipt of the claim for fire loss in January 2011, the insurer, Castlepoint Insurance Company, denied coverage on the ground that Morales had made a material misrepresentation in the application for insurance. After Morales commenced a lawsuit, Castlepoint asserted, among other defenses, that the policy was void ab initio as a result of the misrepresentation that plaintiff occupied the premises. Supreme Court denied Castlepoint's motion for summary judgment dismissing the complaint on this ground.

On appeal, the Appellate Division, Second Department reversed, granted the motion, and dismissed the complaint. The Court held that Castlepoint demonstrated that the application for insurance contained a misrepresentation and that the misrepresentation was material, i.e., that it would not have issued the policy "if the correct information had been disclosed in the application." Furthermore, Castlepoint established that the material misrepresentation was attributable to Morales, because even though he apparently did not sign the application, "he ratified the representations contained in the application by accepting the policy for owner-occupied premises and permitting it to be renewed for years thereafter on the same terms."

Morales is significant in that it stands for the proposition that an insured may be responsible for the representations made in an application for insurance, even if the application is submitted by a third-party, such as a broker, where the insured accepts the policy and subsequent policy renewals. It is also significant that the court ruled in favor of the insurer in the context of a motion for summary judgment (i.e., without the need for an evidentiary hearing or trial). Policyholders and insurers, as well as their attorneys, must examine such applications carefully.

Should you have questions regarding the information presented in this alert, please contact Anthony J. Piazza, Chair of the firm's Insurance Coverage & Regulation Practice Area, at (585) 295-4420 or


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