Insurance Coverage Exclusions for Known Loss, Prior Knowledge, and Prior Notice: Evolving Judicial Standards

Advocating Scope of the Exclusions From the Policyholder and Insurer Perspectives

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, February 13, 2019

Recorded event now available

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Program Materials

The CLE webinar will address liability policy exclusions designed to preclude coverage for potential liabilities known to the insured when applying for coverage. The panel will provide insights into the evolving standards for how courts construe such provisions, whether such exclusions apply to innocent insureds, and the tools savvy counsel can deploy to limit client exposure.

Description

Insurance coverage is premised on the concept of fortuity—a loss that occurs by chance or accident. When an insurance company issues a policy, it insures against risk of possible loss, not a certainty. Insurance carriers do not intend to provide coverage for a loss that has occurred, is in progress, or is substantially certain to occur. But situations inevitably arise where policyholders try to obtain insurance coverage for a prior loss.

While insurers can avoid these problems by either excluding coverage for known losses in the insuring agreement or requesting information about known losses during the application process, it is not always practical to seek this information across all lines of business. And courts continue to recognize the known-loss rule and refuse to allow insurance coverage for a loss that has already occurred.

Many courts interpreting such provisions have found them to be clear and unambiguous. To cite but one example, in the recent case of First Horizon Nat'l Corp. v. Houston Cas. Co., (6th Cir. July 10, 2018), the court affirmed summary judgment on behalf of the insurers where the insured bank concealed critical facts about a government investigation until the eve of settlement. There, the court held that the insured failed to provide timely notice of—or adequate notice of a potential—claim. However, some courts have found that the prior knowledge exclusion does not apply or that issues of material fact exist that prevent the court from granting an insurer summary judgment.

Listen as our panel of veteran coverage counsel discusses these exclusions and highlights their benefits and shortcomings as useful tools for both insured and insurer to identify and manage specific categories of risk that will—or will not—be included in the underlying policy.

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Outline

  1. Introduction to prior knowledge exclusions
    1. Known loss
    2. Prior knowledge
    3. Prior notice
  2. Analysis of recent case law
  3. Best practices for limiting client exposure

Benefits

The panel will review these and other contentious questions:

  • What is the elusive key to determining the difference between known and unknown losses?
  • What is considered to be a claim that is "reasonably foreseeable"?
  • When do the insured's subjective impressions and opinions play a dispositive role?
  • When do judges find that the prior knowledge exclusion does not apply or that issues of material fact exist that prevent the court from granting an insurer summary judgment?
  • What are the most recent case law developments on the scope and applicability of these exclusions?

Faculty

Byrne, Jane
Jane M. Byrne

Partner
Quinn Emanuel Urquhart & Sullivan

Ms. Byrne, Co-Chair of the firm’s Insurance and Reinsurance Litigation Group, has been consistently recognized as...  |  Read More

Gilmore, Danielle
Danielle L. Gilmore

Partner
Quinn Emanuel Urquhart & Sullivan

Ms. Gilmore, Chair of the firm’s National Insurance Recovery Practice, is an accomplished litigator with an...  |  Read More

White, Paul
Paul S. White

Partner
Wilson Elser Moskowitz Edelman & Dicker

Mr. White focuses his practice on complex insurance coverage and bad faith litigation and represents defendants in...  |  Read More

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