Wade Clark Mulcahy LLP

In <em><a href="https://www.wcmlaw.com/wp-content/uploads/2019/12/Neiditch-v.-William-Penn-Life-Ins.-Co.-of-N.Y..pdf">Neiditch v. William Penn Life Ins. Co. of N.Y.</a></em>, the Appellate Division, Second Department, addressed the issue of when an insurance policy may be rescinded for material misrepresentation on a summary judgment motion.

The case involved a dispute over life insurance.  The plaintiff was the named beneficiary under the policy and sued the insurer to recover the $1 million benefit under the life insurance policy after the decedent died from an anaphylactic reaction to a food allergen.  The defendant insurer denied coverage, arguing that the policy should be rescinded because the decedent’s application for the policy contained a material misrepresentation with regard to the decedents prior medical history.  The trial court agreed with the insurer and dismissed the case on summary judgment.

On appeal, the Appellate Division considered the issue with particular attention to whether material misrepresentation was a question of law or fact.  “Ordinarily,” the court found, “the question of materiality of misrepresentation is a question of fact for the jury. However, where the evidence concerning the materiality is clear and substantially uncontradicted, the matter is one of law for the court to determine”. The Second Department affirmed the trial court's decision and held that the insurer was entitled to summary judgment and that the policy was properly rescinded due to material misrepresentation, since the record was clear that the decedent did not disclose information about his prior hospitalizations for anaphylactic reactions.

The decision serves as a reminder to both insureds and insurers about the gravity of material misrepresentations on insurance applications.  Where the record shows a clear misrepresentation, courts will not hesitate, even on dispositive motions, to uphold policy rescissions.

Thanks to Andrew Debter for his contribution to this post.  Please email <a href="mailto:gcoats@wcmlaw.com">Georgia Coats</a> with any questions.