PlumBot: Bot: Creating new article from JSON

2026-03-13T13:11:19Z

Bot: Creating new article from JSON

New page

🚫 '''Prior knowledge exclusion''' is a policy provision — predominantly found in [[Definition:Claims-made policy | claims-made]] [[Definition:Liability insurance | liability]] coverages such as [[Definition:Professional liability insurance | professional liability]], [[Definition:Cyber insurance | cyber]], and [[Definition:Directors and officers liability insurance (D&O) | D&O]] insurance — that excludes coverage for [[Definition:Claim | claims]] arising from circumstances the [[Definition:Insured | insured]] knew about, or reasonably should have known about, before the policy's inception date. The exclusion targets a specific form of [[Definition:Adverse selection | adverse selection]]: an applicant who is already aware of a potential claim or wrongful act purchasing a new policy in the hope that the resulting claim will be covered. Although the concept exists across global insurance markets, its exact formulation and the legal standards for what constitutes "knowledge" vary significantly between jurisdictions and even between policy forms within the same market.

⚙️ The exclusion is typically triggered by questions on the [[Definition:Insurance application | insurance application]] asking whether the applicant is aware of any facts, circumstances, incidents, or potential claims that could give rise to a future claim under the policy being applied for. If the insured fails to disclose known circumstances and a claim later materializes, the insurer may invoke the prior knowledge exclusion to deny coverage — and, depending on the jurisdiction, may also pursue remedies for [[Definition:Misrepresentation | misrepresentation]] or [[Definition:Non-disclosure | non-disclosure]]. In the [[Definition:Lloyd's of London | London market]] and under English law, the [[Definition:Insurance Act 2015 | Insurance Act 2015]] introduced a "proportionate remedy" framework for non-disclosure, which modifies the insurer's available remedies depending on whether the non-disclosure was deliberate, reckless, or innocent. In the U.S., state laws and case law govern the interplay between the exclusion and the [[Definition:Duty of disclosure | duty of disclosure]], producing a patchwork of standards. Some policies employ an objective test ("knew or should have known"), while others use a subjective one ("actually knew"), and the choice profoundly affects how disputes are resolved.

💡 For [[Definition:Underwriter | underwriters]], the prior knowledge exclusion is a first line of defense against moral hazard in claims-made portfolios, and its precise wording is among the most negotiated provisions in professional and management liability placements. [[Definition:Insurance broker | Brokers]] and [[Definition:Risk manager | risk managers]] counsel clients to review application questions carefully and to consider notifying their expiring insurer of any known circumstances under that policy's [[Definition:Notice of circumstances | notice-of-circumstances]] provision before it expires, rather than carrying undisclosed exposure into a new policy period. Failure to navigate this process correctly can leave an insured in a coverage no-man's-land — excluded by the new insurer under the prior knowledge exclusion and time-barred from recovery under the prior insurer's policy. This interaction between the exclusion, the application process, and the [[Definition:Prior insurance clause | prior insurance clause]] makes the prior knowledge exclusion one of the most consequential provisions in claims-made insurance.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Claims-made policy]]
* [[Definition:Prior insurance clause]]
* [[Definition:Notice of circumstances]]
* [[Definition:Duty of disclosure]]
* [[Definition:Adverse selection]]
* [[Definition:Insurance Act 2015]]
{{Div col end}}

Definition:Prior knowledge exclusion - Revision history

PlumBot: Bot: Creating new article from JSON