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by Eunbee Cho

In Hiscox Dedicated Corporate Member, Ltd. v. Taylor, 162 F.4th 919 (8th Cir. 2025) (“Hiscox II”), the Eighth Circuit delivered an opinion packed with fact-intensive inquiry and analysis of material misrepresentation in an insurance application and agency law. Hiscox II is the culmination of a protracted coverage dispute that spanned five years and resulted in two Eighth Circuit decisions. While the procedural history of Hiscox Dedicated Corp. Member, Ltd. v. Taylor, 53 F.4th 437 (8th Cir. 2022) (“Hiscox I”) and Hiscox II are complicated, both are predicated on the same set of facts. In early 2018, Suzan Taylor filled out an industry standard ACORD application form to obtain property insurance coverage for her home in Hot Springs National Park, Arkansas. As relevant here, the application form asked: “Has applicant had a foreclosure, repossession, bankruptcy or filed for bankruptcy during the past five (5) years?” Taylor answered no. Thereafter, a High Value Homeowners property insurance policy was issued to Taylor by B&W, a multi-state insurance agency that Hiscox Syndicate 33, a Lloyd’s of London underwriting syndicate, had authorized to serve as its general agent.

A few months later, a fire destroyed the insured property. Hiscox’s adjuster reported several “red flags” raising the possibility of arson, but the cause of the fire remained inconclusive. Based on its investigation, Hiscox concluded that Taylor made several material misrepresentations in her application. Accordingly, the carrier rescinded the policy ab initio and returned the policy premium.

At the time of the application, foreclosure proceedings had been initiated on the Hot Springs property, but it had not yet been sold. Therefore, when the case was presented to the Eighth Circuit for the first time in Hiscox I, the court held that the question asking whether Taylor “had a foreclosure” was ambiguous in the circumstances because the term foreclosure could mean the foreclosure sale itself or, depending on the context, the process leading up to that sale. Applying an Arkansas rule that favors the insured when a policy term is deemed ambiguous, the Eighth Circuit adopted the interpretation of “foreclosure” more favorable to Taylor—defining it as the ultimate sale of the property—and held that Taylor’s answer to the application question was not a misrepresentation.

Hiscox I, the district court held that the foreclosure question was not ambiguous in the circumstances of that property because its foreclosure proceedings had started in 2014 and it was sold in a foreclosure sale in 2016—all within the five-year period specified in the application question. Thus, regardless of which reasonable meaning of the word “foreclosure” Taylor had used to interpret the application question, she should have answered that she did have a foreclosure in the past five years. In a second appeal to the Eighth Circuit, the Hiscox II court affirmed the district court’s holding that Taylor’s failure to disclose that information on her application constituted misrepresentation.

Under Arkansas law, if a misrepresentation is material to the risk, an insurer may rescind coverage even if the misrepresentation was made innocently and in good faith. A misrepresentation is material if the insurer can show that, had it known of the misrepresented facts, it would not have issued the policy. According to Hiscox II, uncontradicted testimony from the underwriters that they would not have issued the policy had they known of the misrepresented fact is sufficiently conclusive for a court to find that the misrepresentation was material. Thus, the appellate court held that the district court had properly relied on the underwriters’ testimony and underwriting guidelines to find that Taylor’s answer to the foreclosure question was a material misrepresentation because one of her properties had been sold in a foreclosure sale within the period specified by the question.

Hiscox II also involved a significant agency question. Taylor argued that the insurer could not rely on her misrepresentation because B&W, the insurer’s general agent, had knowledge of the foreclosure. Applying general agency principles of Arkansas law, the district court explained that knowledge of a general insurance agent is considered knowledge of its principal if the agent acquires that knowledge while acting within the scope of its agency relationship for the principal. In other words, if B&W had learned of the foreclosure while acting as an agent for Hiscox Syndicate 33, that knowledge would be imputed to the insurer. Here, B&W had learned of the foreclosure while acting as an agent for a different insurer. Thus, the district court held—and the Hiscox II court affirmed—that knowledge could not be imputed to Hiscox, and the insurer was entitled to rescind Taylor’s policy ab initio based on her misrepresentation.

The Hiscox I decision serves as a cautionary tale to insurers that courts may find ambiguity in contractual language based on the facts of each case, rather than on the wording itself. Hiscox II highlights the fact-driven nature of the misrepresentation inquiry, demonstrating that the underwriter’s decision-making process may be a conclusive factor in the court’s consideration of whether a misrepresentation was material. Documentation of the kind of information that could disqualify an applicant from receiving coverage may support a misrepresentation defense.

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The opinions expressed are those of the authors and do not necessarily reflect the views of the firm or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.