According to a February 2026 New York Supreme Court judgment, the insurer was entitled to avoid the policy because of a misrepresentation that the premises were occupied as the insured’s primary residence whereas, since inception of the policy which had been renewed since 2017, the premises were always occupied by two separate tenants.
Under New York statutory law, a misrepresentation is material, voiding the policy from inception, if, had the true facts been known, either the insurer would not have issued the policy or would have charged a higher premium. Materiality can be established from an affidavit by an underwriter and documentary evidence regarding underwriting practices.
According to the insurer’s guidelines, if a building is occupied solely by tenants, then the insured’s primary residence must also be insured in order for the tenant-occupied building to be eligible for coverage. The insurer’s underwriting manager affirmed on affidavit that had the insurer known that the claimants were not using the premises as a primary residence, the policy would not have been issued.
The importance of this judgment for South African insurance is that inducement to issue the policy at all, or on certain terms, has to be proved by the insurer. Unless an underwriter can give evidence, preferably supported by underwriting guidelines, that that specific policy would not have been issued had the facts been correctly represented, the avoidance may not be upheld.