Insurance Defense and Coverage
Exclusions and Special Issues
Application misrepresentations include false answers about loss history, operations, prior claims, or known circumstances likely to give rise to a claim. Materiality is judged by whether the truth would have affected the underwriting decision.
Professional lines applications commonly include prior knowledge questions whose answers are frequently disputed.
Alternative Names:
Application Misrepresentation, Material Misrepresentation
Why it Matters?
Prior knowledge questions in professional liability applications generate the most litigation, because they ask whether the applicant knows of circumstances that might result in a claim, and the answer is judged with hindsight after a claim arrives. Courts differ on whether the standard is subjective awareness or objective reasonableness. Careful applicants disclose broadly, since a disclosed circumstance excluded from coverage is better than a rescinded policy.
Frequently Confused with
Related terms
Frequently asked questions
What is a prior knowledge question?
Is an innocent mistake sufficient for rescission?
