The exclusion removes coverage where, before the policy period, the insured knew or reasonably should have known of an act or circumstance that might give rise to a claim.
Standards vary between subjective knowledge and objective reasonableness.
Alternative Names:
Prior Knowledge Provision, Known Circumstances Exclusion
Why it Matters?
This exclusion produces the coverage gap professionals most often encounter, because a problem recognized shortly before renewal falls outside both the expiring policy, if not reported, and the new one. The subjective versus objective standard determines the outcome in close cases, and the difference is substantial: an objective standard reaches circumstances the professional did not actually recognize. Reporting known circumstances before renewal is the only reliable protection.
Frequently Confused with
Related terms
Frequently asked questions
What standard applies to prior knowledge?
How is the gap avoided?
