The Result of New York Supreme Court Case Concerning Insurance Fraud Has Harsh Result For Innocent Parties

Matter of Progressive County Mut. Ins. Co.

This case has complex procedural facts concerning the stay of arbitration to determine the validity of disclaimers of coverage under an automobile insurance policy of persons who fraudulently caused two automobile accidents with a car full of people. One of the automobiles hit was the respondents. The Supreme Court, Nassau County determined that the fraudulent parties' insurer correctly disclaimed coverage based on facts demonstrating that its insured was staging automobile accidents. However, based on that conclusion, the court noted that the respondents could not recover from their insurance policy's uninsured motorist endorsement because their injuries were caused by an intentional collision, an occurrence that was excluded in the policy's endorsement.

The court notes that this policy language has been upheld by courts to exclude recovery for intentional conduct, and it recognized the injustice to the injured, innocent parties. The court made an overture to the Legislature to fill this "glaring void" in the Insurance Law.