In Citizens United Reciprocal Exchange v. Perez, (A-67-13)(073384), the New Jersey Supreme Court unanimously held that where an insured obtains an automobile insurance policy by fraud, the policy can be rescinded, but the insurer remains liable to innocent third parties for the contracted coverage amount.
The insured had obtained a “basic policy” from CURE that allowed an election to include optional $10,000 coverage for third-party bodily injury. However, the insured failed to disclose a household resident on the application, despite being asked that question. The undisclosed resident later was involved in an accident while driving an insured vehicle, according to court documents.
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