A New York appeals court let an insurer void two policies because the owner listed two apartments when the building had three.
On July 29, 2026, the Appellate Division, Second Department, showed exactly how a wrong answer on an application can cost a policyholder coverage - and what a carrier must prove to make it hold.
Union Mutual Fire Insurance Company issued commercial policies to a property owner in 2020 and 2021, relying on the applications it received. Those applications listed two apartment units. The insurer later determined the building had three.
The gap came to light after a personal injury lawsuit was filed against the owner. Union Mutual rescinded the policies, treating them as if they had never existed, and went to court for a declaration that they were void ab initio - void from the start - and that it owed no defense or coverage in that suit.
The insurer lost round one. A Nassau County judge denied its motion and dismissed its complaint in the owner's favor. Union Mutual appealed.
The appeals court reversed. An insurer can rescind when an applicant makes a material misrepresentation, it said, and "a misrepresentation is material if the insurer would not have issued the policy had it known the facts misrepresented."
Proving that takes paperwork. As the court put it, the insurer "must present documentation concerning its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, which show that it would not have issued the same policy if the correct information had been disclosed in the application."
Union Mutual had it. An affidavit from its underwriter and guidelines showed it would have charged a higher premium had the third unit been disclosed. The owner "failed to raise a triable issue of fact."
The discrepancy alone did not decide the case. The underwriting record did. The court returned the matter to Nassau County to enter judgment voiding the policies and declaring that Union Mutual owes no defense or coverage in the underlying suit.
