INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
A material girls’ voided world or liar, liar house on fire
In a dispute that literally took years to resolve, it testified to the accuracy of an ancient adage that “honesty is the best policy.” Suzan Taylor (Taylor) was the owner of real property located in various parts of Arkansas. She arranged coverage for each property through a United Kingdom corporation called Hiscox Dedicated Corporate Member Limited (Hiscox).
That company funds a Lloyd’s of London underwriting syndicate. That syndicate, via Burns & Wilcox, Ltd. (its authorized agent), provided a high value homeowners policy on one of Taylor’s properties, which was located in Hot Springs, Arkansas. It was issued with a $2.6 million limit on the dwelling, a $1.3 million limit on personal property as well as a limit of $260,000 for loss of use/rents. After a claim was presented for a fire that destroyed the property, a problem arose.
The policy was issued effective February 8, 2018 to February 8, 2019. The fire loss occurred in August 2018. Hiscox began an investigation of the claim. Later, the insurer advised that the policy was being rescinded. Taylor was sent a full premium refund. Taylor’s attorney returned the premium, challenging the rescission. In response, Hiscox filed a lawsuit.
Hiscox’s rationale was that the rescission was appropriate as Taylor concealed material information at the time she applied for coverage. Taylor responded with a counterclaim, alleging that Hiscox was guilty of dealing in bad faith in handling her claim, breach of contract, and that the rescission was unjustified. The lower court, eventually, determined that Taylor did make a material misrepresentation and, after a remand, ruled in favor of Hiscox, allowing the rescission to stand. Taylor appealed.
During the appeal, the higher court revisited the parties’ arguments. Hiscox’s position was that Taylor was not forthcoming when completing the insurance application for the property that, later, burned down. Specifically, the insurer had discovered that another one of Taylor’s properties was seized by a lender and remarketed in a foreclosure sale. However, Taylor’s application (a standard ACORD form) included this question:
- Has applicant had a foreclosure, repossession, bankruptcy or filed for bankruptcy during the past five (5) years?
Taylor responded “No” to this item. Since the foreclosure sale took place within the timeframe of the question, this was considered a material misrepresentation and, in Hiscox’s view, justified the decision to rescind the policy under their policy’s “Concealment or Fraud” Condition.
Taylor presented several arguments, including two of particular note. One, she claimed that the term “foreclosure” could be ambiguous. Two, she stated that the Lloyd’s syndicate that insured the foreclosed property was aware of the foreclosure sale and that the applicable policy was non-renewed. Therefore, Hiscox was also aware of that information.
However, the higher court failed to embrace Taylor’s position. They recognized that “foreclosure” could be viewed either as a process that leads up to a property’s seizure or as the actual seizure. Regardless, at the time the application was completed, Taylor was aware that one of her properties had gone through a process that resulted in a foreclosure sale. Therefore, her negative response to the foreclosure question was false.
With regard to knowledge held by the Lloyd’s underwriting syndicate (Syndicate 609), which once insured the foreclosed property, it was not the same unit nor the same representative that received the false information on the application it underwrote for Taylor (Syndicate 33). Therefore, knowledge of the one syndicate could not be imputed to the other.
The higher court ruled in favor of Hiscox, affirming the lower court decision to allow the rescission of Taylor’s policy.
Hiscox Dedicated Corporate Member Limited v. Suzan E. Taylor—U.S. Court of Appeals for the Eighth Circuit—No. 24-1161—December 16, 2025.
