Material Misrepresentation Defenses Must Follow the Insurance Law 3105 Rule

Key Takeaways

• Under Insurance Law § 3105, a misrepresentation voids a policy only if it is material — the insurer would not have issued the same policy had it known the truth.
• To prove materiality as a matter of law, the insurer must produce its underwriting documentation: manuals, bulletins, or rules pertaining to similar risks.
• In Veksler v Ameriprise, the carrier won below without that proof — and the Appellate Term reversed because the underwriting file never made it into the record.
• Conclusory underwriter affidavits, without the supporting documents, do not carry the burden.

The Decision

Liliya Veksler, LCSW, P.C. v Ameriprise Ins. Co., 2018 NY Slip Op 50741(U)(App. Term 2d Dept. 2018).

“In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from an order of the Civil Court which granted defendant’s motion for summary judgment dismissing the complaint upon the ground that plaintiff’s assignor had procured the insurance policy in question by making a material misrepresentation as to his place of residence.

“A misrepresentation is material if the insurer would not have issued the policy had it known the facts misrepresented. To establish materiality as a matter of law, the insurer must present documentation concerning its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, that show that it would not have issued the same policy if the correct information had been disclosed in the application” (Interboro Ins. Co. v Fatmir, 89 AD3d 993, 994 quotation marks and citations omitted]).

Upon a review of the record, we find that defendant failed to establish as a matter of law that it would not have issued the policy in question. Consequently, defendant did not demonstrate that the misrepresentation by plaintiff’s assignor was material.”

Clearly, Ameriprise thought it could avoid handing over the underwriting file. For non AIP cases, this is fatal. For AIP cases, I have learned that the rates are determined on a pre-set State schedule based upon residence. Thus, you do not see the “underwriting file” play much of a role on those types of cases. I suspect Ameriprise knew better, and almost slipped a fast one by the Courts.

The Legal Framework: Insurance Law § 3105

Insurance Law § 3105 governs misrepresentations made in the procurement of an insurance policy. It defines a misrepresentation as a false statement of past or present fact made to the insurer in the application, and it provides that no misrepresentation avoids the contract unless it was material — meaning knowledge of the true facts would have led the insurer to refuse to make the contract.

Two features of the statute do most of the work in litigation. First, materiality is ordinarily a question of fact; it becomes a question of law — suitable for summary judgment — only when the proof admits no reasonable disagreement. Second, the proof that gets a carrier there is documentary. The Appellate Division’s formulation in Interboro v Fatmir, quoted by the Veksler court, requires underwriting manuals, bulletins, or rules pertaining to similar risks showing the carrier would not have issued the same policy.

The common rate-evasion fact pattern illustrates the point. An applicant who lives in Brooklyn lists a relative’s address in a lower-rate territory. The misstatement is plainly false — but falsity alone does not void the policy. The carrier must connect the false answer to its own underwriting rules and show what it would have done with the truth: declined the risk, or issued a different policy at a different premium.

Why This Matters for Carriers, Providers, and Policyholders

In the no-fault context, the misrepresentation defense has unusual power. Fraudulent procurement of the policy is a coverage defense that, under the case law collected in the firm’s fraudulent procurement cluster, stands on different footing than ordinary claim defenses subject to the 30-day preclusion rule. A carrier that proves the policy was procured by material misrepresentation can defeat the assigned claims of every medical provider that treated under it — which is exactly why providers fight so hard over the quality of the carrier’s proof.

Veksler shows the proof requirement has teeth. The Civil Court granted Ameriprise summary judgment; the Appellate Term reversed because the record lacked the underwriting documentation Fatmir requires. A carrier cannot rest on an underwriter’s say-so or on the intuition that nobody insures a Brooklyn driver at a rural rate. The manuals and rate rules must be in the motion papers.

My practice observation in the original note bears repeating. In assigned risk (AIP) cases, premiums follow a pre-set state schedule keyed to residence, so the “underwriting file” plays a smaller role — the rate consequences of a false address are effectively built into the published schedule. In voluntary-market cases, by contrast, withholding the underwriting file is fatal to the defense. For the broader doctrinal landscape, see the firm’s guides on material misrepresentation in insurance claims and misrepresentation in policy procurement.

Practice Pointers

For carriers: build the summary judgment record the way Fatmir prescribes. That means an affidavit from an underwriter with personal knowledge, attaching the manuals, bulletins, or rules in effect at policy inception for similar risks, and explaining how the true facts would have changed the underwriting outcome. Redact what must be redacted, but produce the documents.

For providers and claimants: scrutinize the carrier’s motion papers for the documents, not just the affidavit. If the underwriting file is missing, Veksler is your roadmap to defeating the motion — materiality has not been established as a matter of law.

For everyone: distinguish materiality from falsity. Proof that the assignor misstated a residence answers only half the question. The other half — what the carrier would have done with the truth — belongs to the carrier alone, and only its underwriting records can answer it.

Frequently Asked Questions

What is a material misrepresentation in insurance?

Under New York Insurance Law § 3105, it is a false statement of fact in the application that is material — meaning the insurer would not have issued the same policy, on the same terms, had it known the truth. An immaterial false statement does not void the policy.

How does an insurer prove a misrepresentation was material?

With documentation of its underwriting practices: manuals, bulletins, or rules pertaining to similar risks showing the policy would not have been issued (or would have been issued differently) if the application had been truthful. A conclusory underwriter affidavit without the documents is insufficient, as Veksler v Ameriprise demonstrates.

Can a material misrepresentation void a no-fault claim?

Yes. If the policy was procured by material misrepresentation, the carrier can disclaim, and that defense reaches the assigned first-party claims of medical providers who treated under the policy. But the carrier carries the Insurance Law § 3105 burden of proving materiality with its underwriting records.

Related Resources

• Material Misrepresentation in Insurance Claims: New York Legal Guide
• 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 cluster hub
• Browse the firm’s Legal Encyclopedia for more no-fault coverage defenses
• No-Fault Defense practice