Material Misrepresentation Under Florida Law: Ab Initio Rescission in a NY No-Fault Case

Key Takeaways

• In Universal Health Chiropractic v Infinity, a Florida auto policy was rescinded ab initio under Florida Statutes § 627.409 after the carrier learned the assignor neither lived nor garaged her vehicle at the Florida address on the application.
• Because the defense went to whether a policy ever existed, it was not subject to New York’s preclusion rule — no timely denial was required.
• Under Florida law, rescission requires notice to the insured and return or tender of all premiums within a reasonable time after discovering the grounds.
• Had someone other than the assignor made the misrepresentation, the general deemer statute would likely have required the carrier to pay benefits.

Universal Health Chiropractic, P.C. v Infinity Prop. & Cas. Co., 2014 NY Slip Op 50350(U)(App. Term 2d Dept. 2014)

The Decision

No preclusion here.

“The vehicle involved in the accident at issue was, at the time of the accident, insured by defendant under a Florida automobile insurance policy issued to plaintiff’s assignor. After an investigation into the accident revealed that the assignor had not resided at the Florida address listed on her insurance application and that her vehicle had not been garaged at that Florida address, defendant cancelled the policy ab initio, pursuant to Florida Statutes Annotated, title 37, § 627.409, which permits retroactive cancellation of an insurance contract if there has been a material misrepresentation in an application for insurance”

“Under Florida law, in order to show that it voided a motor vehicle policy ab initio, pursuant to Florida Statutes Annotated, title 37, § 627.409, an insurer must demonstrate that it gave notice of the rescission to the insured and that it returned or tendered all premiums paid within a reasonable time after the discovery of the grounds for avoiding the policy”

What would have happened had it not been the assignor who committed the material misrepresentation in the procurement? The general deemer statute would have probably been effective and carrier would have had to pay benefits.

The Legal Framework

Two doctrines collide in this case, and it pays to keep them separate.

First, choice of law. When an out-of-state policy lands in New York no-fault litigation — usually because the insured vehicle was in a New York accident and a New York provider took an assignment of benefits — the validity of the policy is governed by the law of the state where it was issued. Here that was Florida, and Florida law differs from New York’s in a critical respect: § 627.409 permits retroactive cancellation — rescission ab initio — for a material misrepresentation in the application. New York bars retroactive cancellation of auto policies; a carrier discovering procurement fraud here generally must cancel prospectively.

Second, preclusion. New York’s no-fault regime, 11 NYCRR Part 65, requires a carrier to pay or deny a claim within 30 days, and most defenses are forfeited if not raised in a timely denial. But a narrow class of defenses survives preclusion because they go to whether coverage ever existed. A policy rescinded ab initio under the law of its issuing state is void from inception — there is no contract from which benefits could flow. That is why the Appellate Term opened with “no preclusion here.”

Florida adds its own procedural conditions: the carrier must give the insured notice of the rescission and must return or tender all premiums within a reasonable time after discovering the grounds. A carrier that keeps the premiums has not rescinded anything.

Why This Matters for Carriers and Providers

Rate evasion drives these cases. Auto premiums in metropolitan New York are among the highest in the country, and applicants sometimes procure policies in lower-cost states using addresses where they neither reside nor garage the vehicle. When the inevitable New York accident happens, the carrier investigates and rescinds — and the New York medical providers holding assignments find themselves litigating Florida insurance law in a Civil Court no-fault part.

For carriers, the decision confirms a powerful, preclusion-proof defense — but one with strict housekeeping requirements. Investigate promptly, document the residency and garaging facts, send the rescission notice, and tender back the premiums. Skip a step and the rescission fails under Florida’s own law.

For providers, an assignment of benefits is only as good as the underlying policy. Before sinking litigation costs into a claim under an out-of-state policy, counsel should evaluate whether a fraudulent procurement defense is in play and whether the carrier actually complied with the rescission formalities — the premium refund is a genuine, checkable fact.

The closing point deserves emphasis: the misrepresentation here was the assignor’s own. Where the procurement fraud is committed by someone other than the injured person, the general deemer statute — which deems minimum statutory coverage into policies written by authorized carriers for vehicles used in New York — would likely have obligated the carrier to pay benefits notwithstanding the rescission.

Practice Pointers

• Identify the issuing state immediately. The rescission analysis — and whether retroactive cancellation is even possible — turns on the law of the state where the policy was written.
• Carriers: prove the full Florida package. Investigation, materiality, notice of rescission, and premium refund or tender within a reasonable time. The refund is the piece most often litigated.
• Providers: test the rescission, then the deemer. If the formalities fail, the policy stands; if the misrepresentation was not the assignor’s, the deemer statute may still produce coverage.
• Plead it as a coverage-never-existed defense. Framed that way, it survives an untimely denial; framed as ordinary policy cancellation, it may not.

Frequently Asked Questions

Can an insurer retroactively cancel an auto policy for misrepresentation in New York?

Not if the policy was issued in New York, which limits carriers to prospective cancellation. But where the policy was issued in a state like Florida, whose § 627.409 permits rescission ab initio for material misrepresentation, New York courts apply the issuing state’s law.

What must a carrier do to rescind a policy under Florida Statutes § 627.409?

It must show a material misrepresentation in the application, give the insured notice of the rescission, and return or tender all premiums within a reasonable time after discovering the grounds.

Does the no-fault preclusion rule bar a rescission defense raised in an untimely denial?

No. Because rescission ab initio means the policy never existed, the defense goes to the existence of coverage itself and is not precluded by an untimely denial — exactly how the Appellate Term treated it here.

Related Resources

• A primer on Florida Law
• Material Misrepresentation in Insurance Procurement: New York Law Protects Policyholders
• Identity Fraud in Insurance Policy Procurement: Long Island NYC Legal Guide
• Fraudulent procurement and preclusion
• Fraudulent procurement defense precluded — the firm’s fraudulent procurement cluster hub
• Browse the firm’s Legal Encyclopedia for more coverage doctrine
• New York No-Fault Insurance Law
• No-fault defense practice page

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Legal Update (February 2026): Florida Statutes § 627.409 and the rescission requirements cited in this 2014 decision may have been amended since publication. Practitioners should verify current Florida statutory provisions and recent New York appellate decisions addressing cross-jurisdictional insurance coverage disputes and the deemer statute.