Key Takeaway
Court rules that proving military status misrepresentation isn't enough when insurance company fails to timely deny claim in no-fault case.
Understanding Material Misrepresentation and Timing Requirements in No-Fault Insurance
In New York’s no-fault insurance system, insurance companies often attempt to deny claims by alleging that policyholders made material misrepresentations when applying for coverage. However, having evidence of misrepresentation alone isn’t sufficient — timing matters critically. Insurance carriers must follow strict procedural requirements when asserting these defenses, and failing to do so can result in waiving their right to contest coverage entirely.
The material misrepresentation defense has become increasingly common as insurers seek to avoid paying legitimate claims. This defense strategy, which evolved from earlier fraudulent procurement claims, requires carriers to prove both that a misrepresentation occurred and that they followed proper denial procedures.
Jason Tenenbaum’s Analysis:
Healthy Way Acupuncture, P.C. v USAA Gen. Indem. Co., 2016 NY Slip Op 51342(U)(App. Term 1st Dept. 2016)
“While defendant submitted evidence showing that plaintiff’s assignor misrepresented his military status in the underlying insurance policy application, defendant is precluded from asserting that defense as a result of its untimely denial of the claim (see Westchester Med. Ctr. v GMAC Ins. Co. Online, Inc., 80 AD3d 603 ; Gutierrez v United Servs. Auto. Assn., 47 Misc 3d 152, 2015 NY Slip Op 50797 ).”
The result here was preordained.
Key Takeaway
Even when an insurance company can prove that a policyholder made misrepresentations during the application process, the company can lose its right to assert this defense if it fails to deny the claim within the required timeframe. This case demonstrates that procedural compliance is just as important as substantive evidence in no-fault insurance disputes.
