BMW FINANCIAL SERVICES NA, INC. v. HASSAN

ORDERED that the order is reversed, on the law, with costs, the motion is granted, and the cross motion is denied.

The plaintiff, BMW Financial Services NA, Inc. (hereinafter BMW), leased a vehicle to the defendants Khaldoon Hassan and Khaled Hassan, on condition that they obtain an automobile insurance policy naming BMW as an additional insured. Instead of complying with that provision of the lease, the Hassans induced Khaldoon's parents to insure the vehicle under the parents' automobile insurance policy, issued by the defendant New York Central Mutual (hereinafter NYCM). The parents represented to NYCM, inter alia, that they had leased the vehicle and that Khaldoon was an additional driver residing with them. The policy listed BMW as the owner/lessor of the vehicle and named it as an additional insured. After the vehicle was reported stolen, and after an investigation, NYCM disclaimed liability as to both the Hassans and BMW, claiming that the parents had no insurable interest in the vehicle and thus, the policy was void ab initio.

Contrary to the Supreme Court's conclusion, NYCM improperly disclaimed liability as to BMW. An insurer undertakes a separate and distinct obligation to the various insured parties, whether named as the principal insured or as an additional insured (see, Morgan v. Greater N.Y. Taxpayers Mut. Ins. Ass'n, 305 N.Y. 243, 249; Greaves v. Public Serv. Mut. Ins. Co., 5 N.Y.2d 120, 123 [the obligations of the insurer to the named insured on the one hand, and to the additional insured on the other, must be considered separately]; see generally, State Farm Mutual Automobile Ins. Co. v. Grund, 243 A.D.2d 557; Meade v. North County Coop. Ins. Co., 120 A.D.2d 834 [mortgagor named in policy as additional insured was entitled to recover under the policy despite purported misrepresentations of mortgagee who had obtained the policy]). As the owner of the vehicle, BMW had an insurable interest for which NYCM provided coverage (see, Insurance Law § 3401; Scarola v. Ins. Co. of North America, 31 N.Y.2d 411, 413). Under the circumstances, it is irrelevant to the consideration of the BMW claim that the principal insureds had misrepresented their own interest in the insured vehicle, and BMW was entitled to recover for its loss under the terms of the policy.