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Eighth Circuit: Insurance Application’s Foreclosure Question Is Ambiguous

by John Hensley


In a dispute over alleged material misrepresentations in a homeowners insurance application, the U.S. Court of Appeals for the Eighth Circuit examined the meaning of the question whether an insurance applicant had “had a foreclosure.” In Hiscox Dedicated Corporate Member, Ltd. v. Taylor, 53 F.4th 437 (2022), the Eighth Circuit held that question to be ambiguous and construed it against the insurer. The court reversed and remanded for the Western District of Arkansas to continue sorting out the dispute.

Suzan Taylor owns residential property in Hot Springs National Park, Arkansas. See Hiscox Dedicated Corporate Member Ltd. v. Taylor, No. 18-06100, 2021 WL 4693221, at *2 (W.D. Ark. Oct. 7, 2021), rev’d and remanded, 53 F.4th 437. In early 2018, Taylor worked with an independent insurance agent to apply for home insurance from Hiscox Dedicated Corporate Member Limited. Taylor and her agent completed an industry-standard application form which included the following question: “Has the applicant had a foreclosure, repossession, bankruptcy or filed for bankruptcy during the past five (5) years?” Taylor answered no. Hiscox, 53 F.4th at 438. However, “[o]nly six days before Taylor submitted her application,” Taylor’s mortgagee had issued a “Notice of Default and Intention to Sell.” Id. The document set a date and time when Taylor’s home would be sold. Through her attorney, Taylor reached an agreement with the mortgagee, and her house was not sold. Taylor did not disclose these events in her insurance application to Hiscox. Relying on her application, Hiscox issued a policy to Taylor.



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