One of the most well-established propositions of New York insurance law (not at all a universal view) is that there is no right to cancel a policy of automobile liability insurance retroactively (ab initio) as against an innocent third party, even for fraud or misrepresentation in the procurement of the policy. Such cancellations are, however, allowable against the participants in the fraud. See Integon Ins. Co. v. Goldson, 300 A.D.2d 396 (2d Dep’t 2002); Ins. Co. of North America v. Kaplun, 274 A.D.2d 293 (2d Dep’t 2000); Taradena v. Nationwide Mut. Ins. Co., 239 A.D.2d 876 (4th Dep’t 1997); Travelers Indem. Co. v. Avelino, 191 A.D.2d 229 (1st Dep’t 1993).

‘O’Connor’

Almost 60 years ago in Aetna Cas. & Sur. Co. v. O’Connor, 8 A.D.2d 530 (2d Dep’t 1959), aff’d. 8 N.Y.2d 359 (1960), the New York Court of Appeals was presented with the following question (of first impression): “Does the New York Automobile Assigned Risk Plan of Insurance, which in explicit terms provides only for prospective cancellation, abrogate the insurer’s common law right to void a policy from its inception on the ground that it had been obtained through fraud or misrepresentation?”

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