Prior Known Facts (Management Liability)

Prior Known Facts exclusions remove cover for claims linked to situations the insured already knew about, or should have known about, before the policy began. Insurance is meant to cover unexpected losses, not situations where the insured already expects a claim. Insurers usually apply this exclusion through questions on the proposal form, asking if the insured knows of any facts that might lead to a claim. If the insured answers yes, the insurer may exclude that matter. If the insured fails to disclose it, related claims may void the cover later. In Australia, the Insurance Contracts Act 1984 (Cth) sets a duty of disclosure. It requires the insured to reveal matters a reasonable person would see as relevant. This duty applies to commercial policies, like most Management Liability covers. It differs from the rules for consumer insurance contracts, which now follow a different disclosure standard. Because of this overlap, honest disclosure is essential. Non-disclosure can lead to a denied claim, a voided policy, or a reduced payout, depending on the circumstances and how serious the breach is.

Prior Known Facts exclusions remove cover for claims linked to situations the insured already knew about, or should have known about, before the policy began. Insurance is meant to cover unexpected losses, not situations where the insured already expects a claim. Insurers usually apply this exclusion through questions on the proposal form, asking if the insured knows of any facts that might lead to a claim. If the insured answers yes, the insurer may exclude that matter. If the insured fails to disclose it, related claims may void the cover later. In Australia, the Insurance Contracts Act 1984 (Cth) sets a duty of disclosure. It requires the insured to reveal matters a reasonable person would see as relevant. This duty applies to commercial policies, like most Management Liability covers. It differs from the rules for consumer insurance contracts, which now follow a different disclosure standard. Because of this overlap, honest disclosure is essential. Non-disclosure can lead to a denied claim, a voided policy, or a reduced payout, depending on the circumstances and how serious the breach is.