Monday, November 17, 2008

Lying About Auto Accident Voids Liability Coverage

AUTO – NON-COOPERATION – FRAUDULENT MISREPRESENTATION
Nationwide Mut. Ins. Co. v. Posa

(4th Dept., decided 11/14/2008)


Nationwide's insured, Posa was involved in an auto accident with Baughman and left the scene without providing any identifying information to Baughman or the police.  Posa submitted an insurance claim to Nationwide, claiming that he damaged his pickup truck by driving into it with his garden tractor.  Posa's former girlfriend later  informed the police that Posa had been involved in the accident with Baughman's vehicle, and Posa pleaded guilty to leaving the scene of an accident.  When it learned of Posa's admission, Nationwide disclaimed coverage based, among other things, Posa's failure to cooperate with Nationwide and his fraudulent misrepresentations concerning the accident.  Nationwide then commenced this action for a declaration that it was not obligated to defend or indemnify Posa in Baughman's underlying personal injury action. 

In REVERSING Niagara County Supreme's order that denied summary judgment to Nationwide, the Fourth Department held:
We agree with plaintiff that Supreme Court erred in denying that part of its motion for summary judgment seeking a declaration that it has no duty to defend or indemnify Posa in the underlying action. Plaintiff met its burden of establishing Posa's lack of cooperation and misrepresentations, and defendants failed to raise a triable issue of fact (see Nationwide Mut. Ins. Co. v Graham, 275 AD2d 1012, 1013; see generally Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168-169). Posa's "failure to make fair and truthful disclosures in reporting the [accident] constitutes a breach of the cooperation clause [and the fraud and misrepresentation clause] of the insurance policy as a matter of law" (Nationwide Mut. Ins. Co., 275 AD2d at 1013).

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